Skip to content
Home Blog News & Trends

What Can U-Haul Rates Tell Us About U.S. Migration Patterns?

Paul Moore
6 min read
What Can U-Haul Rates Tell Us About U.S. Migration Patterns?

America is on the move, and America’s moving companies are scrambling to keep up.

U-Haul is America’s largest mover, reaching every corner of the U.S. What can U-Haul city-to-city rates tell us about U.S. migration patterns? And how can you utilize U-Haul rates to help you build your real estate investment business?

Jason Hartman, a BiggerPockets member, fantastic investor, and just a great human being pointed out the benefit of using U-Haul rates in an email to his list last fall. I am indebted to him for this idea.

U-Haul’s Business Model

Like all other capitalist businesses, U-Haul’s rates are based on supply and demand. Their supply is in the form of available trucks at a given location. Their demand is based on the number of renters at a given location who want to get to another location (either locally or elsewhere).

For this post, we’ll just consider one-way moves to different cities. If there is a high demand for trucks leaving a city, the rates go up. The resulting low supply of trucks left behind has the same effect: higher rates. High demand and low supply combine to cause even higher rates.

On the other end of the line, the most popular destination cities will end up with the highest inventory of trucks and the lowest demand for rentals leaving town—a combination that drives low rates.

Related: How Data Analysis Can Make You Rich in Real Estate Investments

I don’t know about U-Haul’s logistics, but it’s clear that the massive supply of trucks at top destinations needs to be moved to cities where demand is high and supply is low. If I’m correct that many of those trucks have to be moved at a painful cost to U-Haul, the impetus for low rates at those destination cities could be heightened.

One could surmise that the very low rates from high destination cities to high exit cities benefit U-Haul, as they can make a small fee instead of paying for the truck to be transported there anyway.

The combination of these factors can really tell us something interesting. Let’s take a look.

U-Haul Rates and Migration Patterns

Based on the logic above, I reasoned that city pairs with dramatic differences in rates might give us hints about migration patterns.

I live near Smith Mountain Lake in Virginia. From April 2020 up to now, we’ve witnessed a vast migration of homebuyers coming from New York, Philadelphia, DC, Northern Virginia, and more. So I thought it would be good to take a look at the rates for renting a 26-foot truck from New York City to Moneta, Virginia. Check it out.

U Haul NY to Moneta

Over a four to one price difference? Could this be something to do with the disparity in sizes between America’s largest city and the tiny hamlet of Moneta (where What About Bob? was filmed, by the way)?

So I decided to check rates from the Big Apple to Charlotte, a large regional destination city. Look at the difference between New York to Charlotte versus Charlotte to NY.

U Haul NY to Charlotte

Over a five to one ratio! Wow.

Here’s what’s crazy about these numbers. They include base mileage. See this note on the NY/Charlotte rental.

U Haul Note on Rates

Here’s why that’s significant. If we assume the mileage is a large part of the calculation, and the mileage is the same in either direction, then the rate calculation must consist of a base amount and mileage. Since the mileage component is the same, the ratio of the difference in base components, the part of the rate determined by supply and demand, must be even more substantial.

That was a good East Coast example. Let’s check the other coast. It’s widely known there’s a major migration from San Francisco to Austin. Tech employees and entrepreneurs in the Bay Area are finding wonderful opportunities and a lower cost of living in Texas’s capital. Check this out:

U Haul SF to Austin

Another ratio of about five to one.

Let’s look down the middle of America. What about moves from Nashville to Chicago and vice-versa?

U Haul Chicago to Nashville

Wow! Over a 6 to 1 ratio. Does this mean about six times as many people are moving from Chicago to Nashville as Nashville to Chicago? Perhaps it is in this ballpark.

A Few Notes

U-Haul publishes a list of 25 of their top growth cities in the U.S. and Canada. Their newest list came out this month and you can find it here.

Also, note that I’m not at all saying you need to invest in one of these great destination cities to be successful. My most successful investments last year were in Fairbanks, Alaska; Louisville, Kentucky; and Beeville, Texas. (Ever heard of Beeville? I hadn’t either.)

How Can This Help You Build Real Estate Wealth?

BiggerPockets caters to thousands of investors who invest out of state (or want to). Our own David Greene wrote a book to teach investors to successfully invest outside their area. I do a Saturday BiggerPockets Live show and I get frequent questions about how to invest out of state and where. This is certainly a hot topic.

If you are planning to invest out of state, there is a long list of criteria you need to check out before taking a trip and making any offers. One of my favorite criteria is Net Migration or Net Domestic Migration.

Net Migration is the difference between the number of immigrants (the number of people coming into an area) and the number of emigrants (people leaving an area) throughout the year. A great website to track this for many cities is the Texas A&M Real Estate Research Center.

This is important stuff. You may get a great single or multifamily deal. Good for you. But if it’s in a city that is losing population, you may be fighting a losing battle. This is another example of supply and demand driving rents and profitability. A receding tide drops all boats.

While official stats on Net Migration are helpful, they can be outdated quickly. But U-Haul rates point to the supply and demand of moving trucks in real-time. They shouldn’t be ignored.

Related: 7 Ways to Discover if a Neighborhood Is Up and Coming

Let’s look at an example. Brian Burke is a friend of mine and the author of a great book, The Hands-Off Investor. Brian is famous for saying no to potential investment opportunities (no wonder we get along well).

I moved away from multifamily (for now) and expanded into self-storage and mobile home parks in this overheated apartment market. But Brian is finding apartment deals nonetheless. How?

Brian has zeroed in on the migration from California to Arizona. It is powerful. This important demographic means apartment prices will continue to rise as demand outpaces supply in places like Phoenix and Tucson. Brian’s team looks at a lot of stats, and this is one of them.

If you thought the others were surprising…

U Haul LA to

Almost eight to one! The biggest disparity I analyzed. I guess Brian Burke is smarter than some. He’s certainly one of the best real estate investors I know.

Causes of Migration

Will this migration go down in the history books someday, like the Dustbowl or the Great Depression, or is this a temporary blip on the screen? That is yet to be seen.

What is causing this human flow? There are probably many reasons.

  1. Cost of living. The difference in the total cost of living in many cities is driving people out. And they are looking for greener pastures where costs are lower. Cost-of-living metrics include critical components like property taxes, state taxes, real estate prices, and rents.
  1. Legislation. Many cite overbearing legislation that they view as limiting freedom in their decision. Friends of mine moved from New York to rural Virginia because of legislation, for example.
  1. Real estate type and cost. Though I touched on this in point #1, I want to drill down on this a tiny bit more. Many people living in cramped quarters in a place like New York City or Chicago are drawn to a rural home in the mountains, by a forest, or on a lake. Smith Mountain Lake has been getting day-of-listing offers sight unseen from New York City residents. They’re trading in small million-dollar condos for expansive lakefront homes at the same price and feeling great about their new lives.
  1. Distancing. COVID-19 has caused people to think about social distancing, which has given some a desire for more space. Many popular destination cities provide more room to spread out than densely packed urban areas. This is part of looking for a better quality of life overall.
  1. Remote work. This is a first in human history. The opportunity to work from home may be the factor that allows this trend to become permanent. This is even being encouraged by corporations after 2020’s accidental forced experiment. Millions never plan to work in an office environment again.
  1. Jobs. Though remote employment is critical to this analysis, local jobs play a role as well. The factors above, and just the inertia resulting from the migration itself, play a role in creating more local jobs. Legislation and taxes also play a big role in this. Check out Tesla and Apple’s new facilities in Austin and Toyota’s big play in Dallas. All of these jobs could have been created in California, a state many are fleeing.

Conclusion

This post is about U-Haul and real estate investing. But it’s about more than that.

It’s about a mindset. A mindset of looking for data in out-of-the-way places. This is how pros in all fields get ahead of the curve. This is how you and I can get an edge on the competition and build wealth for our families and our investors.

Blog ad for Wealth magazine

Have you found any out-of-the-way places to mine data for your real estate investments?

Tell us where you’re looking for insight in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.