U.S. Population Saves By Moving Inland

December 28, 2011, 11:30 AM EST By Brian Chappatta

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Dec. 20 (Bloomberg) -- New York, California and other high- cost U.S. states may lose residents as the economy recovers, continuing a trend during the past decade of Americans searching for more affordable regions to settle.

The U.S. population climbed 9.7 percent from 2000 to 2010, according to Census Bureau data. Five states -- Nevada, Arizona, Texas, Utah and Idaho -- grew at more than twice the national pace, as California, the most-populous, had its smallest increase ever, the data show.

The Northeast states of New York, New Jersey, Rhode Island and Massachusetts are among those that had population increases of less than half the average. Though migration has slowed, the effects of the economic downturn may rekindle movements away from high-priced areas, said Joel Kotkin, author of “The Next Hundred Million: America in 2050,” a book about demographics.

“If you move from New York to Houston, you just gave yourself a gigantic raise,” Kotkin said in a telephone interview. “As the country has become more stressed, people have to move to those places where they can achieve a middle- class lifestyle at a lower cost.”

Living With Parents

The average sale price of a single-family home in the area including New York City was $464,900 at the end of September, compared with $159,500 in the Houston region, according to National Association of Realtors data.

New York state has the fifth-highest income-tax rate in the U.S., while Texas is one of seven with no personal income tax. California is third-most, at 6.7 percent, trailing only Hawaii and Oregon.

About 1 in 9 people, or 11.6 percent, changed locations between 2010 and 2011, the lowest total since the government began tracking the figure in 1948, census data show. Men 25 to 34 years old, who are usually among the most frequent migrants, have increasingly opted to live with their parents during the past five years, according to government figures.

“A lot of people who would have been out-migrants have not yet left home,” said William Frey, a senior fellow at the Brookings Institution in Washington who has studied census data for more than three decades. “There is this pent-up demand for migration, and it could be that once things pick up, there will be an exodus again from these places.”

Californian Culture

Rich Karlgaard, publisher of Forbes Magazine, wrote in his 2004 book, “Life 2.0,” that Americans would leave cities such as New York, Boston, San Francisco and Los Angeles for smaller towns in Oregon, Missouri and North Dakota.

The population in Los Angeles, the second-largest U.S. city, grew 2.6 percent between 2000 and 2010, the census data show. The population in Santa Barbara, about 90 miles northwest of Los Angeles along the Pacific coast, fell 4.2 percent, while inland cities including Fresno and Sacramento experienced growth of 16 percent and 15 percent, respectively.

Overall, California’s population climbed 10 percent. The Census Bureau on Dec. 21 plans to release July 1, 2011, state population estimates.

Californians have made Oregon a top moving destination, behind Nevada, Arizona and Texas, according to Internal Revenue Service data compiled by Aaron Renn, who examines migration trends for his website Urbanophile.com. His data uses the number of exemptions claimed on tax returns for filers moving between states as a proxy for people.

Similar Culture

Moves deep into the interior U.S. from the coasts have been less frequent, according to the IRS data. California natives prefer destinations such as Phoenix, Salt Lake City and Seattle over areas in the Midwest because of similarities with the climate and demographics, Kotkin said.

“It’s not just going to where prices are the lowest,” he said. “It’s about the places that are the nicest, that are relatively cheaper, and that have similar culture.”

Wall Street may cut an additional 10,000 jobs by the end of 2012, New York Comptroller Thomas DiNapoli said in October. New York City weathered the recession that started in December 2007 better than other major cities because of its large banking industry, which was cushioned by the Troubled Asset Relief Program, Kotkin said.

New Yorkers affected by reductions in financial services may move to “safety valves” like eastern Pennsylvania or upstate New York, the Brookings Institution’s Frey said. Still, recent college graduates may opt to “ride things out” in the city to position themselves for an economic recovery, he said.

Cost of Living

Karlgaard’s book examined the difference between working where you live and living where you work. He argued in 2004 that because of real estate prices, traffic and higher costs of living, “a growing number of Americans are seeking a larger life in smaller places.”

For Wall Street traders and analysts, software developers and biochemists, location choices are much broader than “a guy with a B.A.,” Kotkin said. The unemployment rate in New York in October was 7.9 percent, compared with the national mark of 9 percent, according to the Bureau of Labor Statistics.

Nevada has the highest unemployment rate at 13.4 percent. Average home prices in the Las Vegas area plummeted to $138,000 in 2010 from $220,500 in 2008, the second-biggest decline behind Fort Meyers, Florida, according to NAR data.

“A lot of the jobs in Nevada, Arizona, and Florida were related to the growth itself -- construction and retail,” Frey said. “Once the economy stopped, the growth stopped.”

As housing prices continue to slide, future construction stagnates and unemployment remains elevated, would-be migrants may stay put against their will, Frey said. This will give places like New York and Los Angeles another chance to appeal to residents “stuck” with unsellable homes.

“When migration picks up, to what degree will there still be this gulf between where the middle class can afford to live and where they can’t?” Frey said. “Coastal California will likely still be out of a lot of middle-class homeowners’ reach, as will living in the more expensive parts of the Northeast.”

--Editors: Stacie Servetah, Flynn McRoberts

To contact the reporter on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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