In the U.S., workers can relocate without much restriction, and the free movement of labor is a critical component of American capitalism. It’s also been the most important historical driver of real estate values. In recent times, cities like Austin and Denver became institutional markets as educated workers flocked there while low-growth cities flatlined.

The U.S. historically has seen high levels of internal migration, typically motivated by economic opportunity. Urban in-migration during industrialization and the African American migration out of the South are good examples. But internal migration has dropped as much as 50% since 1990, and it’s not specific to age, home ownership, education, race or other standard demographic markers. A recent research paper delved into the structural factors keeping people from moving when they otherwise would.¹

Before we cover that, let’s address why this matters for real estate investors. A few trends worth tracking:

Low-supply, high-cost markets can persist much longer. The standard thinking is that low-supply, high-rent markets will see demand dwindle as labor relocates to more affordable markets, and that used to be true; it’s much less so now. This trend has been propping up housing prices - for-sale and for-rent - in our most expensive cities and will continue to until migration picks up again.

As labor stays put, local economies are more likely to diverge. Historically, strong job markets spur in-migration and weak job markets lose population. But with workers much less willing to relocate, local and regional imbalances persist longer, with less mean reversion across incomes, wealth levels, and market fundamentals. This widens the range of outcomes - upside and downside - when you place a bet on a specific MSA. Expect to see more divergence as this trend continues.

For many types of real estate, the value of in-place tenants increases. Having less propensity to leave, decision-makers are more likely to renew their leases, and it’s less likely a landlord will find an out-of-market tenant to backfill a vacancy.

And importantly, when thinking about what characteristics make a market attractive for investment, housing availability matters. The common intuition has always been that a high-job-growth MSA will attract workers and that will drive demand for all types of real estate, especially office and residential. We assumed housing decisions were downstream of job-optimizing decisions. This paper suggests that’s not true as “housing related factors… have increasingly impeded internal mobility.” High job growth will not necessarily drive real estate returns like it used to.

The authors are direct about it: “Housing market considerations are in fact the key to understanding internal migration declines.” More specifically, migration has declined because people have become significantly more tolerant of high housing costs in their home market. Higher housing costs no longer spur people to move away, as we’ll discuss below.

Looking at how the authors got to that insight, they first observed that migration choices are based on several factors, the most important of which are wages and housing prices in the origin and destination locations. Weather, recreational opportunities and moving costs are other common priorities.

Migrants respond to wages and housing prices in part as you would expect. A 10% increase in wages reduces migration from a location by 3.5%. Similarly, a 10% increase in home prices increases migration from a location by 1.4%.

But moving decisions are bilateral - they are a function of what’s happening at the origin location and the destination. And interestingly, the origin and destination effects are asymmetric: what’s happening at the destination matters more. A 10% increase in wages at a destination increases migration 7.8%, and a 10% increase in destination home prices decreases migration 2.6%. In other words, internal migrants are pulled to new places more than they are pushed from where they are.

That explains why people choose to move but it doesn’t explain why internal migration in the aggregate has slowed so much. The authors used these bilateral relationships to construct a model that predicted migration flows, and their model matched actual migration flows well, accounting for the overall decline in domestic migration rates. That led to a key insight.

The migration killer is housing and people’s abiding preference to stay where they are even if local housing prices have skyrocketed. This “insensitivity” to local housing prices is at the core of the trend and “can effectively explain all of the aggregate decline in internal migration.”

It wasn’t always this way: “An increase in origin home prices in the early 1990s is associated with significant outmigration, but that by the mid-2000s this elasticity is close to zero, such that origin home prices are essentially unrelated to outmigration.”

So why during the last 30 years have local workers become so much less willing to move in the face of high housing costs? In economist-speak, why has their elasticity fallen so sharply? Looking deeper at the data, we can make some educated guesses.

Underlying this low-migration trend are workers in five high-wage, high-housing-cost states: California, Illinois, New York, New Jersey and Massachusetts. Rates of out-migration there dropped three times the national average during the study period, and you can see that reflected in the graphs below. In addition, homeowners and older individuals (aged 55+) have become less responsive to home prices over time, while sensitivity is flat or increasing for renters and younger people.

So the decline in mobility is being driven disproportionately by older households and homeowners, particularly in high-cost coastal markets. These are the cohorts with the most embedded equity, the lowest urgency to move, and the highest tolerance for rising housing costs. This is a meaningful departure from prior decades, when rising costs would have pushed residents out and helped equilibrate markets. Today, that release valve is partially shut. But does it stay shut? What happens as these entrenched locals age, sell their homes and require more care? There’s a bet to be made here.

Step back, and this trend also reframes how we think about market selection, and not just in these specific states. For decades, real estate investors were trained to follow labor — to chase job growth and assume housing demand would follow. From this study and others we have written about lately, we know that housing cost, supply, and critically the policies that govern both shapes demand and real estate outcomes. We’re operating in a more complex system than when many of us came up in the business: we have better data, sharper tools, and deeper insight.

The industry has been slow to update its mental models, and that inertia is more costly now than it used to be. Today, with mobility constrained and behavior shifting, markets don’t respond how you would imagine. In a world where trends can change quickly but people don’t, the advantage will accrue to investors who understand not just where jobs are growing, but where housing allows — or prevents — people from acting on that opportunity.

Who: Geolava

What: Grounding AI-driven insights in the physical world to identify what actually moves real estate values.

The Sparkle: First, unlike most proptech, Geolava is all about the owner’s best interests. It’s looking for real-world facts and trends that will influence the value of an asset, and looking in places real estate investors don’t always know to look. Intensity of foot traffic, large-scale demographic trends, possibility of regulatory changes, spatial analysis of the physical asset -- Geolava says it tracks them all, all the time. If that really works, it’s the best owner-focused piece of proptech we’ve seen to date. Thanks to our friends at JLL Spark for flagging Geolava.

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Check out this wonderfully entertaining and well-researched article about “the most important thermal feature in human history.”.

Link: https://cowboystatedaily.com/2026/03/29/how-yellowstones-mushroom-pool-gave-us-covid-tests-true-crime-podcasts-and-the-maury-show/

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