Texas won the pandemic migration boom, but it’s losing its luster

Austin texas
Many Americans couldn’t resist the appeal of Texas last year. RoschetzkyIstockPhoto/Getty Images
  • Texas saw the biggest migration growth in 2021, per U-Haul’s latest growth index.
  • People flocked to the state during the pandemic for its lower cost of living and sunshine.
  • The pandemic put a premium on the Sunbelt, but an urban theorist says it may not last.

No state is hotter than Texas right now.

The Lone Star State saw the biggest migration growth in 2021, according to U-Haul’s latest growth index. U-Haul calculated the net gain of one-way trucks entering a state versus leaving that state in a calendar year for over 2 million customer transactions.

It found that arrivals of one-way U-Haul trucks in the state increased by 19%, compared to an 18% rise in departures from 2020 to 2021. While Texas saw growth statewide, per the index, Dallas led the way. And many of the new migrants had come from the East and West coasts — namely New York and California.

While U-Haul notes that these migration trends don’t directly indicate total population or economic growth, it does measure the allure of cities to new residents. Texas taking center stage is in line with the narrative of a mass exodus to the state and its consequent housing boom.

The state has been a magnet for Americans seeking more space, fewer taxes, and warmer weather during the pandemic, with a particularly strong pull from Silicon Valley. While the Bay Area’s fleeing residents scattered everywhere from Miami to Denver, most flocked to Texas, including Dropbox CEO Drew Houston and Tesla and SpaceX CEO Elon Musk. This influx of tech brought new jobs to the state, while remote work brought relocating workers seeking a lower cost of living. But the boom created an affordability crisis as everyone vies for a place to live.

A Texas housing boom turns into a crisis

A housing study from Texas A&M University reveals home prices in Texas climbed 18.6% year-over-year in 2021, and Redfin discovered that in October 2021, 68.4% of its offers in Dallas faced a bidding war compared to just 53.3% in 2020. 

Incomes aren’t keeping up with the skyrocketing home prices. Although Texas’ personal income increased 4% annually in the third quarter 2021, it’s a significant decline from the second quarter’s rate of 21.7%, according to the U.S. Bureau of Economic Analysis. 

As housing affordability weakens, many potential buyers are seeking alternate options. In Del Valle, Texas, where Tesla’s gigafactory is underway, Zillow data shows average home values have increased by 58% since January 2020. As home prices soar, Bloomberg reported, lower-cost housing alternatives like trailer parks and tiny houses are gaining popularity among the factory’s middle-skill workers who are only earning up to $50,000.

“How is a $47,000-a-year person that has kids, and all of the costs associated with that, going to buy a $500,000 house?” Scott Roberts, the chief executive of mobile home developer Roberts Communities, told Bloomberg. “They can’t.” 

The rise of the Sun Belt

The migration patterns to Texas are evident of the Sun Belt’s popularity during the pandemic. Florida, Tennessee, South Carolina, and Arizona, all ranked in the top five of U-Haul’s growth index.

The Sun Belt region is expected to dominate the market through 2022, a study from Zillow claims, with cities like Tampa, Jacksonville, Raleigh, San Antonio, and Charlotte are projected to lead the US in popularity. 

“The pandemic put a premium on the Sunbelt,” urbanist Richard Florida told Insider. But he thinks its popularity is overhyped, anticipating that more people will return to the superstar cities they moved from as we move into a post-pandemic world. He added that housing prices have to reverse at some point, and when they do, it’ll be Sunbelt boomtowns — like those in Texas — that will take a hit.

“The action is in New York, Los Angeles, and San Francisco,” he said.