Broad geographical migration patterns have a noticeable impact on long-term trends in real estate values. Specific areas of the country have clearly and consistently been growing while others have been shrinking. For example, the northeast and upper-midwest plains states have generally been losing population while the midwest has seen flat to only moderate population growth. Where’s the population moving to, in general? The southeast, the southwest, and the northwest. Between 1995 and 2015, the top twelve states that will see the largest gains in population are listed here:

The broad migration pattern that favors southern and western areas will continue at least through 2015.”

Three migration patterns;west and south for the hospitable economic, social and physical climate and inland to avoid expense and congestion;favor one part of the United States: the southwest.”

In general, Americans are moving south to live in a more hospitable climate and Canadians are moving west to the mild coastal areas of British Columbia. This southern and western migration pattern, which has been occurring for decades, shows strong signs of continuing at least through 2015. The five fastest-growing states are all in the south.

Though the Northeast has steadily been losing population to the migration westward, there are some bright spots. These include Pennsylvania along with Vermont and New Hampshire.

Warmer weather is not the only reason for this southern migration. The west also offers a more open, innovative and entrepreneurial culture that is hospitable to new business, tolerant of various lifestyles, and offers abundant career opportunities. Yet as the west and east coasts have grown increasingly congested and expensive, we have seen a reverse migration inland. This is one reason for the rapid expansion in states like Utah, Georgia, Arizona and Tennessee. For example, Arizona is expected to grow by 63% between 1995 and 2015.

If you combine all three trends in population migration, west, south and inland, you would expect the highest rates of growth in the Southwest. That’s exactly where the biggest boom in real estate has been and will continue to be. If you are considering an investment in real estate, Arizona, southern Utah, southern Colorado and New Mexico especially deserve your attention.

The old realtor’s adage about the three reasons to buy “location, location and location”; requires more than attention to geographical migration patterns. Property prices provide one of the clearest examples of the laws of supply and demand. For instance, in residential property, investors must consider not only the supply of available houses on the market vs. the demand for those houses, but the supply of available land to build new housing inventory. Las Vegas, not long ago a small town on a vast empty plain, has been growing at the astounding rate of 8% per year. Great news for property owners, right? Not necessarily. That vast plain translates into a developer’s paradise such that the supply of houses keeps pace with the demand; and keeps a lid on property values.

Note: We originally wrote these comments in the late 1990s, and time has proven them largely correct. The Southwest did indeed enjoy an enormous population and housing boom. Unfortunately, as we wrote above, you must consider supply as well as demand. And supply of land in the Western states – particularly Arizona and Nevada – is almost unlimited. As a result, the bubble prices of the mid-to-late 2000s proved to be unsustainable under a mountain of new supply and prices tumbled. The aftermath of the housing bubble will linger over formerly hot markets like Las Vegas for quite some time. But overall, demographic trends do suggest that prosperity will return to these Western former boom towns. For the reasons we mentioned above, these areas still stand the best chances of prospering in the years ahead.