Moving to the Hottest Job Markets

People move for many reasons. Seeking to upgrade living spaces, to be closer to family, pursuing warmer climes, economic and cultural reasons, and the ever popular “move for my job.” The inflow and outflow of residents in areas across the country has significant impact on real estate markets and local economies.

There’s no denying the volatility of today’s job market in the United States. New opportunities beckon and drive workers to pack up and head out for cities and regions that offer better prospects, seeing those hot job markets for a chance at a new start. It’s more of a flow than a trickle, too. The U.S. Census Bureau reported that, in 2022 alone, 28.2 million Americans relocated, and the primary driver was better employment opportunities for themselves and their families.^Footnote2

Employment in the United States is strong now and expected to get stronger by 2032. Using 2022 as a base, jobs in the United States are expected to grow 2.8% or about 4.6 million jobs by 2032. But these openings vary vastly by state, according to data compiled from state employment projections by the U.S. Department of Labor. The biggest growth states were projected to be Utah (23.1%), Texas (14.7%) and Arizona (14.4%) by 2032. Maine was the only state expected to be on the downward trend and lose jobs, according to the study.^Footnote3

The National Association of REALTORS® (NAR) used data supplied by the U.S. Census from Q3 2023 to calculate net job migration gains or job-to-job inflows and outflows by state, and a clear pattern emerged. States with stronger job markets, lower costs of living and strong business environments saw higher net inflows of relocators while more expensive states saw higher net outflows of relocators. Net job migration is a measure of gains of job switchers coming from other states and losses of those leaving.

The southeastern and southwestern United States had the largest net job migration of job switchers, the NAR study found. Also, these regions tended to grow their job markets faster than other parts of the country and offer more affordability regarding cost of living, increasing their appeal.

The top five gaining states were:^Footnote4

• Virginia, with a net migration inflow of 7,191 in Q3 2023
• Texas, with a net migration inflow of 7,036 in Q3 2023
• Tennessee, with a net migration inflow of 6,295 in Q3 2023
• South Carolina, with a net migration inflow of 5,992 in Q3 2023
• Georgia, with a net migration inflow of 5,006 in Q3 2023

For states losing the most job switchers, the primary drivers seemed to be talent drain and slow-moving job recovery. For instance, the NAR study found that California — despite being a major job market in the U.S. — saw some 87,000 workers leave for better opportunities elsewhere. Expensive housing in major cities like San Francisco and Los Angeles, paired with very high costs of living, motivated job switchers to head for more affordable options in Arizona and Texas.

A lagging economy in Louisiana and a slow job market there prompted about 20,000 professionals to relocate in Q3 2023, with 41% heading next door to Texas. Faster job growth in Florida and Georgia was a major motivator, as well.

The top five outflow states were:^Footnote4

• California, with a net migration outflow of -18,485 in Q3 2023
• Illinois, with a net migration outflow of -4,598 in Q3 2023
• Louisiana, with a net migration outflow of -2,458 in Q3 2023
• Massachusetts, with a net migration outflow of -2,059 in Q3 2023
• New Jersey, with a net migration outflow of -1,810 in Q3 2023

The U.S. Bureau of Labor Statistics (BLS) highlighted employment increases between November 2022 and November 2023 in cities with at least 1 million population in the 2010 U.S. Census. The top 10 surpassed the national average of 2.9% by, in some cases double:^Footnote5

Charleston, South Carolina, up 6.1% Midland, Texas, up 4.7% Jacksonville, Florida, up 3.8% Las Vegas, Nevada, up 3.8% Raleigh, North Carolina, up 3.8% Dallas, Texas, up 3.3% Miami, Florida, up 3% Birmingham-Hoover, Alabama, up 3% Phoenix-Mesa-Glendale, Arizona, up 3% Kansas City, Kansas, up 1.7%

The ebbs and flows in the job market can have impacts on both commercial and residential real estate, as you’d imagine. Home prices go up with demand and new residential construction starts increase. Commercial real estate markets need to rally to accommodate an influx of workers, and businesses may see the need to expand their footprints by building on to existing property, remodeling or breaking ground on entirely new offices. Growing populations drive the need for growing support services like retail, restaurants, health care facilities and other real estate classified as service oriented.

The National Association of Realtors says it views job migration as a “key indicator for real estate markets, especially for the office sector.” Based on statistics from the BLS, real estate and mortgage professionals in the top 10 job growth cities (and everywhere, for that matter) should keep tabs on the ebbs and flows of local job markets, with the realization they are a major driver of the ebbs and flows of local housing markets.

Knowing the hottest job markets — and developing relationships with partners in those markets — can help you extend your reach and expertise to help your clients.