Remote work kept Americans on the move in 2021. Here's where they're living now.
- Americans took refuge in the suburbs of the largest cities early in COVID.
- A growing share is moving to less populated metro areas or small, semi-rural towns.
- The shift is being driven by employers' adoption of more permanent work-from-home set-ups.
As the COVID-19 pandemic enters its third year and remote work becomes more firmly rooted, Americans are rethinking where they want to live.
For the most part, they’re thinking smaller.
But not too small.
After taking refuge in the suburbs of the largest cities during the early days of the health crisis in 2020, a growing share of U.S. residents are moving to less populated metro areas or small, semirural towns further from urban cores, according to a Moody’s Analytics study of credit agency records.
The shift is being driven by employers' adoption of more permanent work-from-home setups, or hybrid arrangements that have workers coming to the office just a couple of days a week, says Moody's economist Adam Kamins.
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“People are adjusting to what they see as a new normal,” he says.. “We see less movement to suburbs and more movement into second-tier cities,” such as Jacksonville, Florida; Raleigh, North Carolina; Louisville, Kentucky; and Salt Lake City.
Where are people moving to?
And the narrative that many Americans have been moving to rural towns since they can work wherever they want doesn’t seem to be supported by reality. Rural areas continued to lose residents last year, according to figures from Moody's and the W.E. Upjohn Institute for Employment Research.
After the pandemic led to shutdowns in 2020, Anela Malik and Ahmed Zuhairy were working remotely in a 500-square-foot apartment in Washington, D.C.
“We were like, ‘We’ve got to go,’” Malik says.
First, they moved to a Washington apartment that was twice the size, and rent, but that squeezed their budget. They thought of moving to a bigger place in suburban Virginia or Maryland but that would have meant a long commute, especially for Malik, a freelance food and travel writer who dined at Washington restaurants.
Then early last year, “It became clear that (Zuhairy, a financial compliance analyst) wasn’t going back to the office,” allowing the couple to work from anywhere, Malik says.
“We realized this isn’t going away,” she says. “We wanted to live a life where we could have more space.”
They searched for a smaller metro area with lots of nature that still offered cultural amenities as well as new work opportunities.
They settled on the Fayetteville, Arkansas, region last summer following a visit during which they enjoyed the area's lakes, rivers, hiking and biking trials, and a leading arts and cultural center.
Getting paid to move there
It didn’t hurt that the Northwest Arkansas Council, a nonprofit, offered a $10,000 incentive, covering their moving costs.
The couple now rents a three-bedroom house in Rogers, Arkansas, with a backyard for 35% less in rent than their large Washington apartment.
“People are really friendly,” Malik says. “We’re saving money. The space is larger."
The data from Equifax, the credit reporting agency, is illuminating because it includes U.S. adults’ current and prior addresses, revealing where people are moving from and to, not just the broad migration patterns shown in the U.S. Census.
Starting in March 2020, the biggest group of movers poured out of the nation’s largest cities – such as New York, Los Angeles, Chicago, San Francisco and Washington – to hunker down in big-city suburbs or slightly smaller metro areas, often nearby, the Moody’s analysis shows. The report looked at all people moving from one metro area to another, or from the city to the suburbs.
That trend previously has been documented by the Brookings Institution and the Federal Reserve Bank of Cleveland, which found net migration of people from urban to suburban neighborhoods averaged 56,000 a month after the pandemic’s onset in March, double the rate for 2017 to 2019.
Migration was greater in areas that had more deaths from COVID-19, more people working from home and fewer small businesses that remained open, according to the Fed paper, which also relied on credit records.
The exodus to the suburbs amplified an existing trend of millennials leaving large cities for outlying areas as they got married and began raising children around 2015.
Fewer flock to suburbs, some leave
Yet much of the shift to the suburbs from the largest cities appears to have been “an immediate reaction” to the pandemic, Kamins says. Young adults laid off because of the crisis or no longer taking in-person college classes moved back home with their parents. Others rented apartments or houses in the suburbs because they could work from anywhere and a city’s outskirts were less expensive, more spacious and less vulnerable to COVID-19 contagion.
But as more workers returned to the office last year or opted to keep working remotely, they made permanent decisions about where to settle, with surprisingly few returning to large cities. As a result, urban centers continued to lose more residents than they gained, though at a slower pace.
Instead, many people headed to so-called exurban areas beyond the suburbs that have less expensive housing and more open spaces.
Such communities may be an hour or two from the nearest largest city where their employer is located. But that commute is manageable if they’re coming to the office just a couple of days a week, Kamins says. For example, some Orlando, Florida, dwellers are likely moving to Lakeland, while residents of New York City or its suburbs are setting out for the Poughkeepsie, New York, area.
Last year, the share of movers who went to such small metro areas increased to 8% from 6.8% the previous year for those who had been living in the suburbs; to 5.1% from 3.4% for midsize city dwellers; and to 3.2% from 2.6% for large city residents, the Moody’s data shows.
Others left big-city suburbs for smaller but still-large metro areas (Dallas, Philadelphia, Atlanta, Phoenix) in the same region or in the Sun Belt, with such moves rising to 10.3% of the total from 7.9% in 2020. Other suburban residents went to midsize metros (Jacksonville, Nashville, Raleigh, New Orleans) as such moves climbed to 7.4% from 6.8% of the total.
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Meanwhile, country towns continued to shed residents last year, the Moody's data showed.
Hiring in nonmetro areas with fewer than 50,000 people – rural towns, in other words – is 2% below the prepandemic levels, while hiring in metro areas has increased 4.8%, according to a study by the W.E. Upjohn Institute. If more people were moving to rural areas, hiring of restaurant, retail and professional service workers would increase to support larger populations, says economist Brad Hershbein, who conducted the study.
“People like living in metro areas and the amenities they provide,” he says.