Oregon Office of Economic Analysis

Early in the pandemic when working-from-home increased substantially the concept of Zoom Towns — coined by Bloomberg’s Conor Sen — emerged. These were generally smaller, scenic areas that were desirable places to live and where workers could telecommute from. Zoom Towns garnered a lot of attention, rightfully so, and home sales boomed more than in most other markets. However a key question at the time was whether WFH migration would continue to double down on existing growth patterns, or if new patterns would begin to emerge.

Untangling all of the causes and effects is challenging, but as discussed the other day, we know that many medium sized metros and rural counties have seen faster population gains during the pandemic than they did pre-pandemic. And if we focus specifically on some Zoom Towns in western states, an interesting pattern emerges. Zoom Towns experienced population growth and increased demand. Net domestic migration rates to places like Bend, Bozeman, Missoula, and Spokane were all positive in recent years and people moved in. However, it’s actually the Zoom Towns’ neighboring counties that grew the fastest, as seen in the latest edition of the Graph Map of the Week.

So what’s going on here? I see three issues to highlight.

First would be these surrounding areas are small. These counties have thousands, maybe tens of thousands of residents. So from a net migration perspective we are talking about hundreds of new residents, which in percentage terms is very large, if not necessarily from a raw numbers perspective. Plus we need to recognize potential sample size and margin of error issues with smaller areas.

Second, the uptick in growth could be the result of farther-flung households moving into rural communities. I think this is what most people were wondering earlier in the pandemic, in terms of WFH opportunities boosting growth. Households now untethered from big cities would repopulate the countryside. Something like that. And right now we do not have the data to confirm nor deny that is the case. But, this brings me to the third item which is what I suspect is primarily happening.

Third, the stronger growth in the counties surrounding the Zoom Towns is likely due to regional dynamics and cascading migration. The increased demand of and migration to the Zoom Towns literally or effectively pushed some residents into nearby communities, probability in large part due to housing affordability and availability.

Now, this isn’t necessarily all bad news, or entirely about housing. Some households do prefer to live in smaller towns. As the bigger hub in the region grows, some want to move away, but also remain close enough to maintain community/economic/social ties they have built up over the years. And for the surrounding communities, the stronger growth boosts their local economies as well. Plus we know most rural counties have faced natural population decline in recent decades where deaths outnumber births. Stronger in-migration helps balance local demographics, which will also support a stronger economy and better funded public services in the years ahead.

However, to the extent this cascading migration is about housing affordability it results in economic displacement. Households try to find the right balance in terms of location, opportunity, and affordability. Economists call this constrained optimization. But we know some of our neighbors, particularly our lower- and middle-income friends, family and neighbors, are financially forced to move at times. As such this data highlights the importance of regional housing markets and continued need to increase Oregon’s housing supply. The new Oregon Housing Needs Analysis (OHNA) is aimed to highlight and address these issues, and our office is part of that process in estimating the need and production targets.

For now we do not have any true details on the 2022 data, but given past years and the underlying dynamics, I strongly suspect the cascading migration is the primary driver of these patterns, as opposed to the bigger metro residents moving directly to smaller, rural towns. This will be something I am very interested in seeing as we get more data. Unfortunately, something like the IRS county-to-county migration data comes out with an even longer lag than the Census data. But will be well worth exploring when available.

A few final notes on the Zoom Towns.

Crook County (Prineville) grew the fastest in the state in the new 2022 Census estimates. At least in years past we know a lot of the migration into Crook came from Deschutes. I suspect that remains the case, but we need more data to confirm. That said Crook County’s economy has been booming as well with strong job growth in recent years. From February 2020 to February 2023, Crook County’s employment is up 12%, ranking second fastest among all counties in the state. Statewide employment is up 1% over the same time period. And while being close to Bend, Redmond, the airport, and the like is beneficial, it is clearly not just those things driving Crook’s gains.

Another item that stands out here is how counties are an imperfect unit of measurement. Obviously La Pine and Redmond, which have been growing fast, are located in Deschutes, and somewhere like Belgrade, MT has been booming just outside Bozeman but is also in Gallatin County as well. So focusing just at the county level, which is the data we have available, can mask some of these cascading migration effects which are likely even more pronounced than the map indicates.

And lastly I cannot pretend to know the local dynamics of Jackson, WY. I do not know why it has a negative domestic migration rate during the pandemic. But if you have ever been there the spillover effects and cascading migration is evident. As you head over the pass into Idaho (Teton County) the growth and changes are very apparent. Towns in there like Victor, ID are growing, changing, and housing affordability is dropping as workers and households move 25 miles away from the main city.