U.S. Migration Trends: Will Increased SALT Intake in Major Markets Be Unhealthy for Real Estate Portfolios?


Mark Fitzgerald
Senior Director, Research

Will McIntosh
Global Head of Research

Chenchao Zang
Data Science Associate, Research

August 2019

Executive Summary

This paper examines the long-term trends in migration across U.S. states and cities, the impact on real estate markets, and whether a meaningful shift in the trends could result from the recent changes to tax law.

  • The Tax Cuts and Jobs Act of 2017 contained significant shifts in tax structure for individuals and businesses. Changes to state and local tax (SALT) deductions could serve to increase migration from higher-tax to lower-tax states.
  • In the current decade, the U.S. has experienced a pronounced decline in interstate migration.
  • Early indicators are mixed as to whether the legislation will have a material impact on migration trends.
  • MSA migration trends have a strong relationship to population growth and for multifamily & office net absorption as a percent of stock, though less tied to absolute growth.
  • The impact of migration trends on multifamily and office rent growth and total returns is less robust.
  • The effect of the tax legislation will be improved real estate performance in lower-tax MSAs relative to higher-tax MSAs, though early indications are this will be at the margins, and the largest coastal, established real estate markets should remain attractive for institutional investors moving forward.