Migration trends are reshaping real estate markets across the United States, with the South experiencing the most significant changes. As more people relocate to the region, the effects are being felt across the housing ecosystem — from buyers and sellers to investors and developers.
By the end of 2024, the South had become the most populous region in the country, with nearly 132.7 million residents, according to the U.S. Census Bureau. Limited housing supply is driving up prices and fueling competitive markets, with homes frequently selling above asking price and in record time.
While rising interest rates have been widely covered as a market influence, the added pressure from low inventory has compounded the challenges. It’s important to note that not all Southern markets are experiencing the same level of demand, however.
Some areas have become saturated, while others are seeing increased investor interest and development opportunities. It’s important for mortgage originators and their clients, especially builders, to be aware of these shifting regional dynamics.
Pandemic boost
In 2020, during the early stages of the COVID-19 pandemic, the country paused amid widespread uncertainty. Businesses — including those in the housing and mortgage sectors — froze operations. As remote work became viable, however, many Americans seized the opportunity to relocate. The South, with its warmer climate and lower cost of living, became a popular destination.
“Over the past 15 years, private lending has grown into a critical source of capital for new construction — particularly for projects targeting millennials and retiring boomers.”
The region saw an increase of approximately 1.8 million people from 2023 to 2024 — a 1.4% rise, outpacing all other regions in both growth rate and total population gain. It was also the only U.S. region where more people moved in than out.
Texas and Florida led the South’s population growth. Texas, now the nation’s second-most populous state, added nearly 563,000 residents in 2024 — the largest numeric gain of any state. North Carolina’s population surpassed 11 million, and Florida’s exceeded 23 million. Both grew well above the national average, at 1.5% and 2%, respectively. Texas, North Carolina, and South Carolina also led in domestic migration gains last year.
Florida headwinds
Although many areas in the South continue to grow, others are facing saturation. Florida is a case in point. While some areas — such as certain neighborhoods in Miami — remain active in sales and construction, other parts of the state are overbuilt.
The Gulf Coast, and particularly the Tampa/St. Petersburg area, has seen excessive development. While some counties still have homes priced around $400,000, others have an oversupply of million-dollar homes that remain unsold.
Two main issues are contributing to the slowdown: uncertainty around insurance coverage and premiums and the increasing threat of hurricanes. As a result, new construction has slowed, and private lending activity in the state has declined. Builders, lenders and buyers alike are proceeding with caution.
Nashville, Tennessee, presents a more favorable picture. Despite slowing price appreciation, both luxury properties and spacious suburban homes in the $750,000 to $1 million range continue to sell well. The market remains resilient, supported by sustained demand.
There is also strong interest in new construction in the Carolinas, particularly in smaller cities like Greenville, South Carolina. Here, upgraded builder-grade homes priced between $500,000 and $600,000 are attracting millennials and baby boomers relocating from higher-cost regions.
Texas, on the other hand, is a mixed market. Some areas, such as Austin, have seen overbuilding in the luxury segment — especially homes priced above $1 million. Demand remains steady for well-appointed homes in the $600,000 to $800,000 range. In Houston and Dallas, strong buyer activity continues across a range of price points, further underscoring the state’s role as a top destination for domestic migration.
Millennial influence
While baby boomers remain a key demographic in southern migration, millennials are exerting increasing influence on the housing market. Millennials were the largest generational group in the U.S. in 2023, with a population of approximately 72.1 million, according to Pew Charitable Trust. Born between 1981 and 1996, they recently surpassed baby boomers in size and will continue to play a dominant role in shaping demand.
Homeownership among millennials lags behind previous generations, however. According to MBS Highway, only about 45% of millennials currently own homes. By comparison, 48% of baby boomers owned homes at age 30, and 65% did by age 40. For 40-year-old millennials, the rate is just 55%.
This homeownership gap reflects pent-up demand. Even though home prices remain elevated, millennials continue to search for affordability and value — making new construction an increasingly attractive option. Builders may see lower profit margins than in past years, but demand from both boomers and millennials is expected to persist. Today’s buyers, however, are more discerning and focused on livability and cost.
High-demand markets for luxury homes remain in cities such as Nashville, Dallas and Houston as well as Charlotte, North Carolina and Charleston, South Carolina. In Florida, the condominium sector tells a different story. Since the 2021 condominium collapse in Miami, demand for older units has diminished. Today, only newly constructed condominiums are seeing strong sales, making new construction the primary opportunity in that segment.
Private capital
Before the 2007 housing crash, traditional banks were the primary financiers of new construction — funding large-scale developments and infrastructure projects. When the market collapsed, home prices dropped significantly (by 20% nationally and 40% in Florida), unemployment soared, and demand dried up. Banks took substantial losses and exited the residential construction space, leaving a gap that private lenders were well-positioned to fill.
Although large builders retained access to institutional capital, small and mid-sized developers increasingly turned to private lenders. Over the past 15 years, private lending has grown into a critical source of capital for new construction — particularly for projects targeting millennials and retiring boomers.
In the current environment, developers must be more strategic than ever. They need a clear understanding of both market conditions and material costs before breaking ground. Equally important is partnering with lenders who understand the construction process — whether it’s for single-family homes or multifamily properties. Private lenders offer several advantages that set them apart from banks:
- Speed and efficiency. Private lenders work quickly. Once the project scope and budget are agreed upon, capital can be allocated for rapid draw disbursements. Many lenders now offer digital tools that allow builders to submit property updates via video and receive funds within hours.
- Personalized service. Borrowers often work with dedicated draw managers who facilitate faster funding cycles. In contrast, commercial banks may take weeks to disburse funds.
- Flexibility. Private lenders evaluate each deal individually and can tailor creative financing solutions to meet unique project needs.
- Fast completion timelines. Because private money comes at a higher cost, developers are incentivized to build, sell and reinvest quickly — reducing risk for both borrower and lender.
This model supports faster project turnover and has proven effective in today’s competitive housing environment.
Inflationary pressures
At the time of writing, new tariff policies under President Donald Trump’s administration are being implemented, introducing volatility to markets. Inflationary pressure is expected to increase material costs, adding new challenges for builders planning future projects.
As with the early months of the pandemic, economic uncertainty may cause potential buyers to hesitate. During COVID’s onset, the market temporarily stalled before experiencing a dramatic rebound, driven by shifts in how and where people wanted to live. A similar cycle could be repeated, but the outcome is uncertain.
Builders and developers may find that acting quickly on existing opportunities is a smart move. Given their speed, flexibility and responsiveness, private lenders are well-suited to help navigate volatile market conditions.
For builders and developers in the South — where migration has fueled population growth over the past several years — staying informed is critical. Understanding current market conditions, accurately estimating construction costs and tracking demand trends will be essential to success.
While the future of the housing market remains uncertain, one thing is clear: demand for housing persists. And with their speed, adaptability, and tailored financing solutions, private lenders may offer the most effective partnership for navigating what lies ahead.
