Americans are moving West, where it’s cheaper to rent than to own

And a group of finance scholars say all is not lost if renters reinvest those savings in other opportunities that can build wealth over the long term.

Americans have been on the move the past two years, and three recent studies of migration patterns show they are heading out West — although an analysis by the National Board of Realtors found those relocating may find it more affordable to rent than to own their new homes.

First, let’s look at where Americans have been relocating and why.

The Tax Foundation, an independent tax policy nonprofit, used U.S. Census Bureau population data, along with recently released data by U-Haul and United Van Lines, to determine — not surprisingly — that lightening one’s tax burden was one motive for migration.

“The picture painted by this population shift is a clear one of people leaving high-tax, high-cost states for lower-tax, lower-cost alternatives,” the foundation reported. It noted that six states (Florida, Tennessee, Texas, Nevada, New Hampshire, and South Dakota) in the top third of those experiencing in-migration from April 2020 to July 2021 don’t impose a personal income tax on residents.

The four states experiencing the most in-migration the past year, however, do have a personal income tax. The Tax Foundation acknowledged in its analysis that taxes may play little to no role in a family’s decision to move.

Technology and the pandemic-induced push for remote work have enabled and encouraged many workers to live where they like to play, the Deseret News has reported. Healthy economies and job prospects, which can also be impacted by corporate taxes, have also been factors for driving people to look West.

“The pandemic has accelerated changes in the way we live and work, making it far easier for people to move — and they have,” the foundation concluded. “As states work to maintain their competitive advantage, they should pay attention to where people are moving, and try to understand why.”

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The U-Haul study of where customers are dropping off its rental vans found western states of Arizona, Colorado, Idaho and New Mexico among the top 10 growth states, according to transactional data compiled for the annual U-Haul Growth Index. Growth states are calculated by the net gain of one-way U-Haul trucks entering a state versus leaving that state in a calendar year.

Texas ranked No. 1 in the U-Haul Growth Index, while California headed in the opposite direction. “California remained the top state for out-migration, but its net loss of U-Haul trucks wasn’t as severe as in 2020,” the company said. “That can be partially attributed to the fact that U-Haul simply ran out of inventory to meet customer demand for outbound equipment.”

The study didn’t speculate on why people were packing up and heading West.

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Now, let’s take a look at analyses that could help these Americans on the move decide whether they should rent or own their new homes in some areas of the West, where high demand is driving up housing prices and rents.

The National Association of Realtors found that in the third quarter of 2021 it was much more affordable to rent than to own a home in 56% of the 178 metro areas measured.

“Many of these metro areas are located in the Western part of the United States (Pacific, Mountain, West North Central and West South Central geographic divisions),” association research economist Scholastica Gay Cororaton wrote.

The association found that nationally, the sum of monthly mortgage, property taxes and maintenance expense is 70% more than the average asking rent (a ratio of 1.7). Of the top 20 metro areas where the cost of owning versus renting ratio is higher than the national average, 13 are in the West.

Here is the association’s top 20 areas where it is less expensive to rent than to own:

Owning vs. renting

Metro areaMedian sale price ($000)Sum of mortgage, property tax and 3% maintenance and insuranceAsking rent on multifamily propertyMortgage to rent ratio
San Jose-Snnyvl-Santa Clara, CA$1,650.0$11,291.00$2,709.004.2
San Francisco-Oakland-Hayward, CA$1,350.0$9,244.00$2,404.003.8
Urban Hololulu, HI$1,047.8$6,814.00$2,038.003.3
San Diego-Carlsbad, CA$850.0$5,837.00$2,156.002.7
Boulder, CO$769.4$5,166.00$1,805.002.9
Seattle-Tacoma-Bellevue, WA$708.4$4,965.00$1,854.002.7
Bridgeport-Stamford-Norwalk, CT$658.9$5,118.00$2,396.002.1
Boston-Cambridge-Newton, MA-NH$657.8$4,781.00$2,482.001.9
Naples-Immokalee-Marco Island, FL$640.0$4,432.00$2,180.002
Barnstable Town, MA$615.9$4,297.00$1,423.003
Denver-Aurora-Lakewood, CO$614.8$4,126.00$1,689.002.4
Reno, NV$553.9$3,719.00$1,471.002.5
Portland-Vancouver-Hillsboro, OR-WA$549.2$3,856.00$1,508.002.6
Wash-Arlington-Alxndria, DC-VA-MD-WV$548.6$3,884.00$1,949.002
Fort Collins, CO$538.2$3,610.00$1,520.002.4
Riverside-San Bernardno-Ontario, CA$524.0$3,636.00$1,850.002
Sacramento-Roseville-Arden-Arcade, CA$512.0$3,546.00$1,701.002.1
Salt Lake City, UT$500.8$3,373.00$1,445.002.3
Austin-Round Rock, TX$498.4$3,857.00$1,581.002.4
Boise City-Nampa, ID$480.8$3,259.00$1,410.002.3

But all is not lost for frustrated prospective homebuyers hoping to build wealth from owning real estate, according to academics at Florida Atlantic University and Florida International University.

The authors of the Beracha, Hardin & Johnson Buy vs. Rent Index, said renters in high-priced housing markets can do just as well reinvesting their savings from renting into stocks, bonds and other investments, according to a report in

The article stated renting and reinvesting would make sense for consumers in Atlanta, Boston, Chicago, Cincinnati, Cleveland, Detroit, Honolulu, Los Angeles, Milwaukee, Minneapolis, New York, Philadelphia, San Diego, San Francisco and St. Louis.

“People living in any of these areas can hardly go wrong, no matter what they decide,” said Beracha, director of Florida International’s Hollo School of Real Estate. “If they find a good home for sale at a fair price and plan on being there more than a few years, then buying certainly makes sense. If they find a better deal in the rental market, they can take that and still be confident in their ability to build wealth over the long term.”

The scholars urged particular caution about buying in Dallas, Denver, Houston, Kansas City and Seattle.

“In these five metros, home prices have shot up so fast, and the potential for near-term price declines is just too great,” Ken H. Johnson, a real estate economist and associate dean in Florida Atlantic’s College of Business, told “There is strong evidence that home prices in these markets are significantly higher than their respective long-term pricing trends.”

Contributing: K. Sophie Will