Is My State Growing or Shrinking?

By Keunwon Chung, Statistical Economist

One of the important factors directly affecting housing demand is underlying demographics. Net migration of households in particular plays a key role in determining housing demand at the local level. Each year the Internal Revenue Survey publishes data sets on both state to state migration and county to county migration and provides good information on migration patterns at the local level.

The IRS matches every single tax payer's social security number in the individual tax forms for two consecutive years, and checks if there are any changes in geographic codes of the address fields. If there are no changes of the county address codes in filed tax returns, the tax payer is counted as a "non-migrant." If only county codes are different and state codes remain the same, the tax payer is considered a "county level migrant." Similarly, changes in state codes mean "state level migration." According to each individual's migration status, the IRS tallies the number of income tax files, exemptions, and the aggregate adjusted income on a county to county basis as well as state to state basis.

Although the data has some limitations, it provides a good source of information on migration patterns. One of the problems it does have arises at the file coverage. The coverage only includes tax returns filed until the 39th week in the IRS's processing year. However, it is known that those returns collected during the first 39 weeks contain about 95 percent to 98 percent of all returns filed during any given tax year. Second, the migration flows data may not represent certain population segments, such as first time tax filers like young adults and new immigrants, or the elderly and the poor. However, the population captured by the data is even more meaningful to real estate professionals. Under the current tax laws, the mortgage interest deduction provides a high incentive for homeowners to file tax returns to enjoy the benefits.

The following chart shows 50 states and the District of Columbia in five different groups according to net domestic migration rates using the state to state migration flows. The majority of the fastest growing states are concentrated in the West. The South also shows active expansion where most of the states belong to the two upper quintile groups. On the other hand, the Northeast and the Mid-West experienced negative net migration.

 

 

The top 11 states in the highest quintile group are listed in the table below.

 

Domestic Net Migration Status by State

 

                                                                                (Unit: Households/Number of Tax Files)

Rank 2007	State	Net Migration	Non-Migrants	Increase Rate (%)	Rank 2006
1	Nevada	17,162	861,441	1.99%	1
2	Arizona	28,622	1,888,565	1.52	2
3	South Carolina	20,048	1,465,086	1.37	6
4	North Carolina	39,521	3,007,667	1.31	5
5	Wyoming	2,372	187,201	1.27	17
6	Idaho	5,571	473,417	1.18	3
7	Georgia	33,387	2,967,362	1.13	4
8	Tennessee	18,818	2,092,793	0.90	10
9	Oregon	10,563	1,249,454	0.85	7
10	Colorado	12,834	1,627,578	0.79	13
11	Utah	6,102	781,626	0.78	18

 

For the full list of Net Migration levels in 50 states and the District of Columbia, read more >

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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