Inman

The US is getting more diverse — and moving to the West

Greetings from California USA. Retro style postcard with patriotic stars and stripes lettering and United States map in the background. Vector illustration.

In the 1950s, California boomed.

Thanks to a surging economy focused on things like aviation manufacturing, as well as vast swaths of cheap land, the Golden State drew thousands of young veterans and their families who were eager to escape the cold and crowding of older cities.

The result: California’s population grew from just under 7 million in 1940 to nearly 40 million last year, making the state the most populous in the country. Meanwhile, Los Angeles — which in 1940 was smaller than Detroit and Philadelphia — became a kind of metonym for the American dream. From the Beach Boys to Joan Didion, from Bertolt Brecht to Tarantino, the myth of California captured 20th century American in a way no other place could.

Now though, it appears that the mythic heart of the U.S. is experiencing another generational shift — raising questions about what kinds of places people will want to live in.

The shift was captured this week in new data from the U.S. Census Bureau. The data describes the U.S. as of 2020, and there are two big takeaways that will have implications for the real estate and housing industries. First, the fastest growing places in the U.S. are overwhelmingly located in the West, but not on the West Coast. And second, the U.S. is becoming a lot more ethnically diverse.

Migration favors the West

The new data specifically shows that the fastest growing state between 2010 and 2020 was Utah, which saw an 18.4 percent jump in population. Utah was followed by Idaho, Texas, North Dakota, Nevada and Colorado — all of which are also located in the West, and which saw between 14 and 18 percent population growth during the last decade.

Utah was the fastest growing state over the last decade. Credit: US Census Bureau

The Census data doesn’t dive into the complex factors that have allowed western states to pull ahead, but housing costs have no doubt been a major factor. In fast-growing Utah, for example, the current median sales price of a home is $465,000, according to Redfin. That’s up nearly 30 percent year over year — a fact that reflects the state’s rapid growth — but it’s still vastly lower than the median price of $923,000 in Los Angeles or $1.5 million in San Francisco.

Similarly, the median price in second-fastest-growing Idaho is $455,000. That’s up more than 32 percent compared to last year, but it’s still a small fraction of what it takes to buy a house in a major coastal market.

The fact that many people are moving out of coastal cities and into more affordable states has been well documented before, and real estate agents in the West have consistently said they’re seeing an influx of out-of-state buyers.

What’s curious about this latest data, though, is just how concentrated the trend is; in recent months agents in other states have also reported seeing an influx of newcomers, but none of those states were able to keep up with their counterparts in the Rocky Mountains. For instance Georgia — where the median home sales price was just over $316,000 according to Redfin — only saw its population increase 10.6 percent between 2010 and 2020.

Part of what’s going on no doubt has to do with local economies. In a recent economic ranking based on GDP growth, Forbes awarded Utah the top spot, while Idaho took third and Colorado fourth. Georgia and California were also both on the list, but presumably the Rocky Mountain states over the last decade managed to hit a sweet spot that balanced opportunity and affordability.

That’s significant because those are precisely the conditions that led to California’s rise as the quintessential 20th century metropolis. And that means this current migration shift could gradually alter the popular conception of where the center of opportunity lies in the U.S. The past was “Surfin USA.” The future is “Rocky Mountain High.”

This obviously has implications for the housing industry. California, for instance, only grew at a rate of 6.1 percent over the last decade, but continues to have high housing prices and more demand than supply. If the West represents what California once did, it follows that it should continue to have a strong housing market for the foreseeable future.

The U.S. is getting more diverse

The other big takeaway from the latest Census data is that the U.S. is becoming significantly more diverse.

Though white Americans still remain the largest single ethnic group, the number of people who identify as white alone fell by 8.6 percent and now stands at 204.3 million. This was the first time that the white population in the U.S. shrank, and that group now comprises just under 58 percent of the country.

On the other hand, in 2010 only 9 million Americans identified as multiracial but in 2020 that number jumped up to 33.8 million — a decade-over-decade increase of 276 percent.

The number of people identifying as Hispanic of Latino — a category that can include any race — climbed 23 percent over the decade to 62.1 million. Hispanic and Latino is the second largest demographic group in the U.S. after white, the data shows, and represents a total of 18.7 percent of the population. Black Americans are the third most prevalent demographic group at 12.1 percent.

A U.S. Census map shows states ranked by diversity. The darker the shade of green, the more diverse the state. Credit: U.S. Census Bureau

The Census also assigns a “diversity index” score to each of the states. The score measures how diverse different locations are, and Hawaii took the top spot. There, people with Asian backgrounds make up the plurality of the population, with 35.6 percent. White Americans comprise 21.6 percent of Hawaii’s population, followed by people of two or more races (but who aren’t Hispanic of Latino) at 20.1 percent. No single race is in the majority in Hawaii.

The data shows that California is the second most diverse state, with Hispanic and Latino residents making of 39.1 percent of the population. White Californians comprise 34.7 percent of the state.

Nevada, Maryland and Washington, D.C., round out the top five most diverse places in the U.S.

As with migration shifts to the West, these changes to the racial make up of the U.S. have profound impacts for the housing market.

In the broadest sense, this could mean that agents who can engage culturally with non-white consumers will have an advantage. In the same way that American’s conception of opportunity could shift from the coasts to the mountains, for instance, the lingua franca may shift away from English in more and more locations. Or, varying assumptions about debt, property ownership, family cooperation and other things could shape how consumers engage with the real estate industry.

More specifically, research has also shown that minority homebuyers still face various forms of discrimination. That discrimination has become a major topic of debate in the real estate community over the last year, with many arguing that it needs to end on moral and ethical grounds.

The new data, however, adds a demographic and financial component to that conversation; if non-white consumers are growing as a share of the population, practicing discrimination also means catering to a shrinking client pool.

In other words, the demographic trends suggest that for real estate, it’s adapt or die.

Email Jim Dalrymple II