Urban Marylanders Are Migrating to More Affordable and Smaller Metro Areas

Introduction

With its unemployment rate reaching 1.9 percent in December 2023, Maryland has the tightest labor market in the country, which poses an ongoing hiring challenge for the state's employers. A key contributor to the tightness is the state's slow post-pandemic labor force recovery, especially in the state's inner-ring suburbs of the District of Columbia. While some of the state's former workers and job seekers have dropped out of the labor force but have remained residents, others have left the state altogether, according to recent statistics that placed Maryland in the top 5 states by net out-migration.

In this post, we examine recent domestic migration trends in Maryland compared to peer states in the Fifth District. In the past few years, many former Marylanders have gone to neighboring states or farther South to Florida, Texas, or the Carolinas. Most of the state's out-migration has originated from the Washington-Baltimore corridor, where former residents have left for smaller and lower cost-of-living metro areas.

Maryland Led Fifth District in Net Loss of Residents

North Carolina (181,566), South Carolina (144,577), and West Virginia (10,733) all experienced net inflows of residents from 2020 to 2022. Conversely, all three areas adjoining the DMV (Greater Washington) lost more residents than they received between 2020 and 2022: District of Columbia (-8,274), Virginia (-18,293), and Maryland (-91,263). While the District of Columbia lost fewer people in 2022 than in 2021, both Virginia's and Maryland's net out-migration accelerated from 2021 to 2022. Maryland experienced the highest out-migration in the Fifth District during both years at -25,641 in 2021, and -65,622 the following year.

Where Are Marylanders moving? And Where Are In-Migrants Coming From?

The top destinations for Maryland's out-migrants are its neighbors (Delaware, District of Columbia, Pennsylvania, Virginia), along with several Southern states (Florida, North Carolina, South Carolina, Texas). Destination states that receive the most Maryland out-migrants tend to also be origin states for more of Maryland's in-migrants. For example, 14 percent of all migrants who left Maryland from 2020 to 2022 were destined for Viginia, while 15 percent of all migrants who came to Maryland originated from Viriginia. However, there are some important exceptions: The District of Columbia was the origin for 13 percent of Maryland's in-migrants despite serving as the destination for only 5 percent of the state's out-migrants.

Maryland's Loss of Residents Concentrated in Washington-Baltimore Corridor

Despite consistent positive international migration into the Washington region over the past decade, nearly all of Maryland's recent net domestic out-migration can be attributed to the Washington-Baltimore corridor. While net domestic migration from Maryland's Capital Suburbs before the pandemic was relatively steady at around -16,000 people per year, it nearly doubled to -31,089 people by 2022.

While migration from the capital suburbs accelerated immediately after the pandemic, migration from the Baltimore area slowed before reaccelerating. Net migration from the Baltimore area decelerated from an average annual loss of approximately 10,000 preceding the pandemic to just 5,951 in 2021, which then spiked to 18,227 in 2022. While much of the Baltimore area's initial post-pandemic moderation was driven by higher migration into its less urban areas (Carroll and Harford counties), Baltimore City recorded a notable decline in net out-migration compared to pre-pandemic readings.

Conversely, Maryland's regions outside of the Washington-Baltimore corridor (Eastern Shore, southern Maryland, western Maryland) recorded steady net in-migration through 2022.

Washington-Baltimore Residents Relocating to Cheaper and Smaller Metro Areas

From a broader regional perspective, migrants from the Washington-Baltimore Combined Statistical Area have increasingly relocated to either smaller, or more affordable regions, a trend temporarily accelerated by the pandemic. The Federal Reserve Bank of Cleveland's Urban and Regional Migration Estimates, created by Stephan Whitaker using the Federal Reserve Bank of New York/Equifax Consumer Credit Panel, track domestic migration across four types of regions: (1) high-cost metros, (2) affordable, large metros, (3) midsized metros, and (4) small metros and rural areas.

In 2019, the Washington-Baltimore region lost a net average of 2,300 migrants per quarter to affordable, large metros, 1,750 to midsized metros, and 1,575 to smaller metros and rural areas. In 2021, out-migration to affordable, large metros increased 61 percent (-3,700 per quarter), 137 percent to midsized metros (-4,150 per quarter), and 83 percent to small metros and rural areas (-2,875 per quarter). While out-migration to affordable, large metros returned to 2019 levels in 2023, out-migration to midsized and small metros and rural areas continued to exceed 2019 readings.

One interesting pattern is the continuation of the pre-pandemic trend of fewer people leaving the Washington-Baltimore area for other high-cost, large metro areas (e.g., New York, San Francisco, Boston). In the second quarter of 2019, 2,000 more people left the Washington-Baltimore region for high-cost, large metro areas than relocated there, but by the third quarter of 2023, the region gained 1,000 more people from those areas than it lost.

As of the most recent reading from the third quarter of 2023, the Washington-Baltimore region lost an estimated 4,800 people to domestic net migration, indicating a slowdown from its largest recorded net outflow of 11,600 reached in the second quarter of 2021.

Conclusion

Among residents in Fifth District states, Maryland recorded the largest net out-migration from 2020 to 2022, contributing to today's tightness in the labor market. Much of the out-migration was concentrated within the state's most urban counties of the Washington-Baltimore corridor. This out-migration is part of a long-term trend of the region's residents relocating to smaller and lower cost-of-living metro areas.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.