Guest Blog provided by StorageCafe, written by Maria Gatea, Senior Reporter at STORAGECafe. Thank you, STORAGECafe, for your intelligent article and addition to the Heights Blog!
A recent study by STORAGECafé, a nationwide self-storage marketplace, looked into the migration patterns throughout the US and ranked the country’s metros based on inbound migration. The study also accounted for net migration and the actual population change in the top 10 metros for inbound migration and investigated how the real estate industry in each metro is adjusting to these migration trends.
Houston Metro Gained More than 90,000 People in a Year
The Houston-The Woodlands-Sugar Land metro area ranks fifth nationally in terms of inbound migration, with more than 275,000 newcomers in just one year, 2017, according to the latest US Census data. About 177,000 residents left the metro area during the same period, resulting in a net migration of almost 100,000, the highest among the 10 metros analyzed closely by this study.
The actual population change, a number that also includes births and deaths, stood at a little over 91,000, placing Houston behind the Dallas and Phoenix metros, which had positive population changes of 131,000 and 96,000 respectively. Interestingly enough, Houston and Dallas act as magnets for the other’s residents – approx. 16,300 Dallasites moved to the Houston metro area in one year, while 15,300 Houstonites headed to Dallas during the same period of time.
Houston Attracts More Gen Xers than Millennials
A little over 40% of the newcomers to Houston are Gen Xers, which means they are between the ages of 35 and 54, and at the peak of their professional lives. Another 32% of them are millennials, between 25 and 34 of age, while a sizable chunk, almost 10%, are 25 and younger, according to American Housing Survey data.
Meanwhile, Dallas is slightly less prone to attract young residents – only 29% of its newcomers are millennials, and about 8% are 25 and younger. Around 14% of the movers to the Houston metro area belong to the Baby Boomer generation, and 2.8% of them are 75 or older. To compare, more than 15% of the newcomers to Dallas are Baby Boomers, while 3.1% are 75 and older.
People Moving to Houston Want Better Housing
When it comes to the reasons why people are deciding to move to Houston, 15% are searching for larger of better-quality homes, while almost 14% want a more desirable neighborhood. That means that 29% of all the newcomers to Houston are motivated by access to good-quality housing.
Another 14% of the movers to Houston are interested in forming their own households, and 12% reported they wanted to be closer to family. That’s the highest percentage of new residents that made the move in order to be around family within the top 10 metros for inbound migration.
More than 9% of the people who moved to Houston declared that they did it for a new job or job transfer, whereas 7.6% made the decision to move based on changes to their household or family size. Reducing commute time was a motivation for 8% of the newcomers, whilst a little over 6% were hoping to reduce housing costs.
How Is the Real Estate Market Adjusting to the Migration Trends?
The influx of population is reflected by the local real estate market, both in terms of apartment rents and new construction. The average rental rate in the Houston metro area was $1,124 in January 2020, according to Yardi Matrix, which represents a 2% increase from January 2019. However, rents in Houston are below the national average, which now sits at $1,395, giving newcomers a good reason to choose Space City over other growing urban hubs.
Moving usually involves a need for self-storage, and from that perspective Houston can be said to be a renter’s market. The average rent for a standard 10X10 self-storage unit in Houston is $84, down 2% from January 2019 and also significantly under the national average of $114 for the same type of unit.
In terms of the evolution of new construction, the Houston metro area had almost 18,300 apartments under construction as of January 2020, more or less in line with last year’s completions. Self-storage construction is cooling, probably due to the receding street rates, with 0.91 million sq. ft. of storage space under construction in January 2020, a 26% drop compared to the previous year.