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USA Real Estate Blog

Midwest Cities Are Not on the Radar for Migrants

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The Midwest is simply not in the picture when it comes to migration nationally. Even its best performing regions are often migration losers with the rest of the country.

Columbus, Indianapolis, and Minneapolis-St. Paul all have growing populations, and basically healthy economies. Yet all of them are have net migration losses with the country when you look only at migration from out of state.

The chart above is metro area migration as reported by the IRS county to county data, aggregated to the appropriate levels.

All of these cities are actually doing worse in net out of state migration than they were during the 1990s. Indy had traditionally had a modest draw from out of state, but that’s turned negative recently. By contrast, Columbus has started climbing out of a hole. This may be one factor underlying overall demographic trends in those cities. Minneapolis-St. Paul is frequently touted nationally for hits high end economy and progressive policies, but is a loser here. (For MSP, I define out of state as non-Minnesota)

This could be driven by changes in in-migration or out-migration or both. So I pulled a quick analysis of out-of-state in-migration only for Indy and Columbus (which are comparable in size). Here’s that chart:

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The IRS changed their methodology in 2014 such that they report fewer records (for privacy purposes I believe). So the post-2013 period is not comparable. What we see here is a pretty stable level of in-migration with an actual peak up around 2011-2013. If I were looking for good news, that it where it would be. Interestingly, Columbus slightly out draws Indy from out of state on a pure in-migration basis. (Both cities draw as many or more in-migrants from in-state as they do from all other states combined).

One case I find particularly of interest is California. California has significant net out-migration and many cities, including places Portland and Nashville have been feasting off the California exodus. (California is actually the #2 net exporter of people to Nashville after the rest of Tennessee). Here are how our three cities fare with California net migration.

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Again, all three are presently losers. And again they did better in the 90s (when Southern California in particular got slammed by the peace dividend). With California’s sky high housing prices and large scale net out-migration, the fact that these Midwest regions are actually losing people to California, even if a small number in Indy, is quite a feat.

Now, migration loss to California is not necessarily bad. Depending on what’s going on, it could even be a good thing in the long run. If people are heading West to work in the tech industry, for example, that’s a form of up-skilling local residents, and even if they never return can build critical networks to Silicon Valley. Still, with the conditions so favorable for attracting California migrants and places like Austin and Nashville sucking in lots of them, I consider these Midwest city figures a negative indicator.

I consider these numbers sobering news for these Midwest regions, and probably all the rest of them I didn’t look at as well, except possibly Chicago.

In case you are wondering about in-state migration, here’s a chart of Indy and Columbus. You can see both have been feasting off in-state migration, and they have nearly identical charts.

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Minneapolis actually gets more of its in-migration from Wisconsin and Illinois than from Minnesota, probably because it has such a high percentage of the state’s population already and also is on a border and includes some Wisconsin counties in its metro area. So I exclude it from this chart. But this is also a good reminder that for all of these places, “out of state” includes next door neighbors, which account for a large share of out of state in-migration.

This is only a blog post and looks mostly at the net migration. To get a more actionable sense of what’s going on, these regions should look at both in and out migration by origin and destination to see what’s happening at a granular level.

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