It’s Going to be Huge… Estimating the Scale of the Current Wave of Migration from NYC to the Hudson Valley
In the introduction post to this series, I noted the recent uptick in the number of people moving to the Hudson Valley from New York City and the rising home prices driven by this trend. This next post is going to look a little more closely at the possible scale of this migration, and make some predictions about where the hotspots are likely to be.
You may have noticed a slew of news articles appearing lately in local outlets like the Hudson Valley Post to national press with more than one story in the New York Times, including this one that got many “locals” very much up in arms about newcomers claiming to be old-timers. Business Insider divided the flight into tiers differentiated by wealth and generations. Also see: this, this, this, this, this, etc.
In a peer-reviewed article published in City and Community in March 2020, Leonard Nevarez of Vassar College and I documented that in the aftermath of 9/11 NYC residents moved upstate seeking safety, but also for an easier pace of life, quality schools, more space inside and out, etc. In some ways, this migration from NYC was a precursor to the “Brooklynization” of the Hudson Valley that, pre-pandemic, was both heralded by proponents as revitalization and panned by critics as gentrification. Housing in general is already in short supply in the Hudson Valley, and affordable housing is even scarcer. This is not a new trend, what’s happening now is acceleration: rents increasing and property values rising, while more and more people are priced out of the market.
If the influx of people who moved to our region from New York City post 9/11 is any indication, the Hudson Valley is poised for a period of rapid change. In the year leading up to 9/11 the Hudson Valley (Putnam, Orange, Dutchess, Ulster, Columbia, and Greene counties) was already experiencing an increase in migration from NYC. Using tax return data from the IRS, we identified people who filed taxes in NYC in 2001 and then in the Hudson Valley in 2002 which revealed that from 2001-2002 the amount of in-migration from NYC doubled. At the peak in 2004-2005, 4087 workers changed their residence from NYC to the Hudson Valley. Prior to CoViD-19, the Hudson Valley was already seeing an increase in in-migration from the city. Article after article in the New York Times and other news outlets touted the river cities along the Hudson as the “New Brooklyn,” while more affluent urbanites were increasingly drawn to locales like Rhinebeck, Cold Spring, and similar towns that were less economically depressed.
As you can see from the IRS data, this migration trend predates the pandemic. There’s abundant anecdotal evidence that COVID has thrown rocket fuel on this fire. In order to make predictions based on real data from the past, we can use the post-9/11 exodus numbers from NYC as a basis for comparison. Utilizing this admittedly challengeable assumption – that the post pandemic wave is going to follow at least the same trend, we can make a general estimation of how many workers are likely to relocate to the Hudson Valley in 2021. This is largely an academic exercise; there is no guarantee that this wave of migration will mirror the post-9/11 increase. But this is the most recent historical comparison we have and we think it is defensible.
From 2001 to 2002, the year to year rate of increase in the number of people moving from NYC to the Hudson Valley doubled from roughly 5 percentage points to roughly 10 percentage points. This level was then more or less maintained until 2007-2008 when the bottom fell out of the housing market. It is unlikely that 9/11 was the only reason for this sustained increase in migration, but it was the probable catalyst. As you can see from the graph, from 2015-2017 there has been a marked spike in this migration pattern that dwarfs the post-9/11 boom. The data clearly shows that this migration pattern predates COVID. One issue with trying to make short-term predictions based on this dataset is that there is a lag in the numbers; without knowing exactly how much in-migration we’ve seen during 2019-2020 , we are hard pressed to predict the 2020-2021 rate. For the sake of argument, let’s take the trend from 2014-2015 onward and use a linear projection to estimate the 2018-2019 figures:
This method projects that 6,672 people who filed their taxes in NYC in 2018 filed their 2019 taxes in the Hudson Valley. This projection assumes that the overall trend continues to increase even though in the previous year the number decreased, and assumes that the increase will correspond with the average of the four previous periods. Again, a lot of assumptions, but current hard data is in short supply. If we then look at the five data points and take the average change per period we get about an 22 percent per year increase. This set of assumptions gets us to January 2020, a few short months before the COVID lockdowns. If the rate of increase were to double as it did post 9/11, we would be looking at a 44 percent increase in 2019-2020. In hard numbers that would be 9,607 people who filed taxes in NYC in 2019 that relocated to the Hudson Valley.
If that comes to pass, the chart will look something like this:
Now I don’t have a crystal ball, and I can’t guarantee that this is exactly how it will all pan out when the dust settles and the data is available, but I think it is a reasonable estimation of the scale of what we should expect in the short-term future. The immediate impact on the local real estate market is apparent, anecdotal reports from real estate agents and the press align with this interpretation of the data, and there was already a large migration trend from NYC to the Hudson Valley ongoing. There are historical precedents ranging from what we experienced after 9/11 going all the way back to the cholera pandemic of 1832.
Here are some predictions about how this could pan out:
Property values are going to increase sharply
Pre-pandemic, the average Zillow Home Value Index for homes in the Hudson Valley had almost regained the value lost after the housing crash and great recession. With new construction of homes slowing to a glacial pace during the pandemic, and an already tight housing market, the law of supply and demand indicates that property values are likely to increase drastically.
There already is some evidence to support this. In my previous post I pointed out that of the 181 metropolitan areas tracked by the National Association of Realtors, Ulster County’s 17.6 percent spike in median home sale prices was the largest MSA growth in the nation since the beginning of the year.
Small cities are going to be the initial hotspots
While the Hudson Valley’s suburban developments are likely to see a boom, especially once a wave of new construction hits, limited housing stock on the market and the relative lack of urban amenities is likely to lessen the initial wave of migration to them. Villages will likely be impacted more than post-war suburban developments. Rural areas will be affected as well, but without a sharp uptick in new home construction, available housing stock will be a hard limit in more rural locations.
With an already tight housing market, limited new construction, and the newfound ability to work remotely, the areas that are going to be affected first and foremost are the Hudson Valley’s small cities.
Beacon and Hudson have already experienced something of a renaissance, having been the front line of the pre-COVID “Brooklynization.” These places have achieved something of a saturation in their housing markets.
Kingson’s housing market was already trending in that direction, and the pandemic is going to hasten it’s transformation exponentially. In our article, Leonard Nevarez and I noted: “Kingston demonstrates the latest, market-driven momentum of amenity development in a region whose small cities and …rural landscapes are “on the map” of metropolitan visitors. Unlike Beacon and Hudson, this city has no single destination-level amenity, trading instead on a reputation as a “hidden” small city with historic architecture (as the state’s first capital) and “contemporary cool.”
The most transformative change over the next couple of years will be seen in the City of Poughkeepsie
I know I buried the lead a bit here, but I am going to dedicate the next post entirely to why I am predicting that Poughkeepsie is going to be a hotspot for this wave of migration from NYC. And why, after struggling for so long with issues of vacant and abandoned properties, and a slowly growing economy, this next wave of in-migration will have the most transformative impact on the Mid-Hudson’s most populous city.
I have been critical of the City of Poughkeepsie in the past and written about how the city has failed to realize the vision of its 1998 comprehensive plan, and how 22 years later it still has not come up with a new one. I have written extensively on Poughkeepsie’s use of an antiquated and unfair delinquent taxes collection method and how that practice has contributed to its failure to address its problem with vacant and abandoned properties. Still, despite its past, the crisis of the global pandemic presents an opportunity for the city, and I truly believe that this is when all of the work Mayor Rolison and the City’s Common Council have done over the past five years will come together and usher in a wave of transformative change.
This wave of transformation has the potential to be generally good for the city, but not without downsides. And it is not too late for Poughkeepsie to prepare.