(The Center Square) – North Carolina trails only Florida, California and Texas for the number of new residents moving from other states, and the migration has come with some growing pains.
New U.S. Census data released last week shows a total of 341,582 people from other states moved to North Carolina in 2022. Florida (738,989), Texas (668,338) and California (475,803) were the only states with more.
“North Carolina has been the beneficiary of having one of the top net in-migration states in the country, and that goes hand and hand with good job opportunities and economic development,” said Mark Zimmerman, a spokesman for NC Realtors. “On the other hand, we haven’t built enough homes to accommodate the influx. We just don’t have the inventory for a quickly growing population.”
The new residents, many from more expensive states, have driven up the cost of homes and priced many native North Carolinians out of the market. It compounds a housing shortage that existed well before the pandemic and has only accelerated since.
With a labor shortage, rising costs and zoning restrictions on growth limiting builders’ ability to respond, as well as increasing interest rates tied to efforts to control inflation, Zimmerman said it’s a situation that’s unlikely to change any time soon.
“It’s a challenge right now, but all things equal we’d rather have good growth in the state than not,” he said. “The people who are here, the first-time homebuyers, are suddenly competing with people coming from states where housing is already expensive. So the competition for first-time homebuyers is pretty intense.”
The recent census data showing the top states new residents are moving from supports that trend, driven in part by a shift to remote work. In 2022, the Old North State gained 34,920 from Florida, 33,919 from Virginia, 27,961 from South Carolina, 25,024 from New York, 22,891 from California, 22,551 from Georgia, and 16,332 from Texas.
Another 58,370 came from abroad, 57,126 of those from a foreign country.
The migration is fueled in large part by conservative policies since 2011 including spending reductions, tax and labor reforms, reduced regulations and reworked business incentives that have buoyed the state’s ranking in the Tax Foundation’s Business Tax Climate Index from 46th in 2011 to 10th in 2013.
The rise to the top stemmed in part from a dramatic increase in state gross product, from 3.8% behind the national average in the seven years prior to tax reform in 2013 to 9.5%, or 0.5% higher than the national average, in the seven years since.
The reforms attracted massive investments from Fortune 500 companies and small businesses that have driven significant population growth, jobs, and revenues for the state’s coffers. With that has come a steady stream of accolades from publications including Site Selection Magazine, Forbes, Business Facilities Magazine, and Area Development Magazine, among others.
The tax reforms led by General Assembly Republicans and opposed by Democratic Gov. Roy Cooper also played a large role in CNBC, generally regarded to lean left, naming North Carolina as America’s Top State for Business two years in a row.
The growing population – pegged at 10.6 million people over the age of 1 in the new census figures – has also increased membership in the U.S. House of Representatives to 14.
State lawmakers continued to build on that momentum in the most recent biennial budget by accelerating scheduled reductions in the state’s personal income tax to 3.99% by 2026, with revenue triggers that could further cut the rate by 0.5% per year to get to 2.49% by 2029.
With triggers met, North Carolina would have the lowest income tax among states that impose one, further boosting the state’s economic competitiveness and attraction for businesses, according to the Tax Foundation.
