How Migration to Austin Could Reshape the Suburbs

September 22, 2022 – 3 Minute Read

Two real estate trends that were accelerated by the pandemic could affect the suburbs of Austin. Even before the lockdown, millennials in small to medium cities were moving out of city centers to the suburbs, and many residents of bigger cities were moving to smaller ones. The pandemic didn’t just affect the moving patterns of people, but it also affected where companies were located.

Austin welcomed an influx of new tech companies during this time, as many were leaving pricey Northeastern and California cities for tax-favorable cities. This, of course, meant thousands of employees for these companies moving to the area. 

Millennials cited the ability to work from home and affordability as the main reasons for moving out of urban areas and into the suburbs. “It’s also likely buyers have new priorities since the pandemic began. Commuting to an office only once or twice a week, if at all, may be an acceptable compromise for employees who now have to drive a longer distance,” says Ashley Fahey, Editor, The National Observer: Real Estate Edition, in The Austin Business Journal.

This has the possibility of affecting the layout of the greater Austin metropolitan area as well as the housing market.

How Migration to Austin Could Reshape the Suburbs

To see how this could play out, look at Las Vegas. Clark County, NV had the biggest migration in the U.S. county-to-county in tax-filing years 2019 to 2020. During this time, out-of-state buyers affected the housing market. Buyers from California were routinely putting in cash offers $30,000, $50,000 or more above list price, pricing out the locals. 

This led locals to move outside of the city, or rent an apartment with roommates instead of buying. Many people stay in the metro area, but move outside of the city center. Some people leave the metro completely, however. When out-of-state buyers increase the prices of the housing market, locals often relocate to suburban or ex-urban areas. This happened in Nashville, too. The Business Journals found, for example, more people moved out of Davidson County, Tennessee, where Nashville sits than into Davidson: 15,468 moved to Davidson while 20,249 moved out in tax-filing years 2019 and 2020. 

What could this migration lead to? When city centers empty out as migration and housing demand shift to suburban counties, this is called the doughnut effect. Austin isn’t necessarily on track for this, but these housing trends can lead to it. Financial consequences of less populated city centers include less tax revenue from sources like property taxes, commercial or residential, which would have a significant ripple effect that local politicians would have to contend with.

If more people retreat to a suburb, however, the playing field often levels out. According to an analysis in The Business Journals, the rental price advantage of living in the suburbs as compared to urban areas declined by 52.9% between July 2019 to July 2022 — from $175 to $107.