Hordes Of Newcomers Driving Up Mountain West Housing Costs? There's More To The Story.
In 2020, the press was filled with stories about droves of wealthy out-of-staters fleeing cities and the pandemic and moving to the Mountain West. Two new reports complicate that narrative.
U.S. Postal Service data analyzed by the real estate investment firm CBRE shows that more than a million people moved away from big cities such as San Francisco, Los Angeles and New York City last year. But most migrated to nearby suburbs and cities such as Sacramento or to sunbelt destinations such as Austin, Texas.
Overall, there wasn't a huge spike in new people moving to the Mountain West, with growth following roughly the same trend as it did before the pandemic.
"If you were gaining population before you tend to be gaining population now," said Bryce Ward, an economist based at the University of Montana who wasn't involved in the CBRE report. "If you were losing population before you are probably losing population now, though at a slightly lower rate."
That said, there were a few outliers. Boise, for example, welcomed more than 10,000 Californians last year – a 27% increase compared to 2019.
But overall, the data suggests that the region's skyrocketing housing prices aren't necessarily due to new people moving here. Instead, it may be driven more by low mortgage rates, the high costs of lumber and other building materials, as well as a rise in outside investors buying property.
Investors are purchasing about one in five homes across the country right now, according to a recent report from John Burns Real Estate Consulting, a research firm based in California. They range from individuals wanting to own a vacation rental to huge hedge funds like BlackRock or J.P. Morgan. Such companies have the capital to outbid others, buy up property and then rent it out. There are also new crowdfunding firms that allow people to buy a share of real estate in the same way you'd buy a share of a company's stock.
"You can buy part of a house now or a portfolio of houses," consultant John Burns said during a recent webinar. "That will change the game. That allows a lot more capital to come in and make housing more expensive."
In cities such as Flagstaff, Ariz., Spokane, Wash. and Boulder, Colo., the share of investors buying property is even higher than the national average.
Home prices across the Mountain West have surged by more than 14.8% compared to last January, according to Federal Housing Finance Agency numbers published in late March.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.
Copyright 2021 Boise State Public Radio News. To see more, visit Boise State Public Radio News.