U-Haul has historically been a great source of information on population movement. On a regular basis they publish the results of “one-way” rentals that give insight into both where Americans are going but also where they’re leaving. In this Self-Storage University podcast we’re going to explore the meaning behind the latest numbers.
Episode 118: Take-aways From The U-Haul Report Transcript
When you talk about U-Haul and self storage, when you use those together, most people think you're going to talk about renting U-Hauls out of your self storage office. But that's not what we're going to talk about. We're going to talk about a report that comes out annually in which U-Haul divulges on their one-way rentals, where the bulk of them emanate from and then where they go. Because the assumption is if you one-way rent from Los Angeles to Austin, that means you're moving to Austin. Now U-Haul is a very good source of information, because they don't really care where those moves come from. They're not trying to promote anything. They have no vested interest geographically on what's the hot spots and not the hotspots. And those reports over the years have been pretty accurate. Normally the information is pretty much what you even expected from what you saw in the media. But it's interesting to watch how things change from year to year and I think there's some good conclusions to be born of that information regarding this year's numbers. Now let's talk about 2023. Let's start off with the 2023 report on the U-Haul one-way rentals.
And the big winners in 2023 on the one-way rentals were Texas, Florida and North Carolina. Then I think we all kind of probably figured that, we saw there were a lot of people moving to Texas. There was a lot of discussion in the media on the economy in Texas and Florida and how good they were. North Carolina, there was a lot of North Carolina love going on from people who were saying, "Ooh, I love North Carolina, I want to move, I want to live in North Carolina." So those weren't really a shocker back in 2023. In fact, we could have probably guessed the list ourselves. But then comes the 2024 winners and losers, where people went and where they moved from that are probably a little more interesting, because you probably never bet on any of the winners. The number one spot in the one-way rental this year was South Carolina. Now why in the heck South Carolina? I think what you see right now in South Carolina is it's got a very interesting, diverse culture, restaurants, weather is pretty decent, access to the beach, although you may have to drive a little bit to get there based on where you are in the state, of course, but also cheaper housing.
So I think a lot of these hot markets on the 2024 is people in search of housing, because another one of the top ones is Oklahoma. Now, Oklahoma is not known for its scenic beauty. It's not known for having amazing activities to do. Although Tulsa might be one part of Oklahoma, which that's not true of. But Oklahoma does have one thing, one common theme, and that's cheap housing. The place is flat as a board. You can build a house almost anywhere. And there's been a lot of housing starts there. So once again, kind of like South Carolina, I think the big attraction in Oklahoma was in search of cheaper housing. And then you had Indiana, just the same story. I don't know of any big news on job formation going on in Indiana, unless you do. But it sounds like, in my opinion, people are moving to Indiana because from what I've seen of Indiana, it has very, very low home cost. And then finally, and this one's a real shocker, is the state of Maine. Who would have ever thought Maine would be on one of the top-four winner lists? But I'm guessing what propelled Maine into the top of the list is, once again, cheap housing.
If you live in the Northeast, Maine probably has the cheapest housing prices of anybody. And that's because housing in Maine is considered kind of seasonal. It's so bitterly cold in the winter, you can't live there. But I think a lot of seniors have a new strategy, whether they move out of the north and move down to Florida, like many of them do. And they may not like Florida, and many don't like Florida. It's too big a cultural shift from where they were in New England. But now what you might do is you might take your house, you have a lot of money in, in Connecticut, sell that and buy a house in Maine, pocket a whole bunch of money, and then when winter approaches, just hunker down in your house with a whole bunch of books, some food that you bought from Costco in bulk, turn the heater up to a nice comfortable 75, turn on the big screen TV with Netflix, and just survive through the winter. When summertime comes, it's fantastic, it's beautiful, it's green, it's ready to go. But I think in all cases this year, in 2024, it was all about cheap housing.
And then you look at the losers and you can see the trend. Where are people leaving in 2024 the most from? Colorado, which incidentally has some of the highest home prices in America. California, same story, very high home prices. Nevada, which has much higher home prices, because many Californians have jumped one state over and run those home prices up. And then New Mexico. Now, New Mexico is weird. I don't know what's going on with New Mexico on that list of people leaving, although I will tell you, I've read myself articles about people leaving that state. You have to remember that state has some real struggles. It's one of the poorest states in the United States. It places terribly poorly on many factors, educational factors, health care factors, all kinds of problems. And it doesn't seem to get the PR that it used to. You rarely see articles these days on the wonders of Santa Fe and "Hey, let's go to Albuquerque." But so what are the takeaways from the list? What's it mean as far as self storage? Well, number one, people are trying to find cheaper stuff. They're willing to move on. They're willing to break and think outside the box and break from tradition to be able to provide their family and themselves with a higher quality of life.
So rather than live in a little tiny townhome thing jammed in like crazy in something like Brooklyn, they're willing to move across America where they can have a real house with a real yard. And we see that same thing going on in self storage. In fact, there's a renaissance right now in suburbs, exurbs, super-commuter neighborhoods and rural areas. And why is that? Because people want cheap housing so bad, they're willing to drive farther out. I don't know the stats right now on traffic counts of highways leading out of urban markets. I can't tell you exactly how many people and how far they commute. But I know that we all have seen from experience people who are pushing farther and farther out. St. Louis, for example, had one of its best population gains ever last year, but it was not in the city of St. Louis, it was in the suburbs. The city of St. Louis population actually went down, but the suburbs and the exurbs, they all went up. That's the direction things are going. So when you're looking to self-storage facilities to buy, don't look in the urban core, that self storage is in real trouble.
There's too much of it. People are leaving. And that's why you're seeing perpetually higher occupancy and lower rents and more move-in specials, because they just can't find enough people to rent it. But out in the suburbs and the exurbs, you're seeing a lot of storage, which is now completely full, and you're seeing rents go up and you're seeing people who are happy to pay them. And don't forget about super commuter in rural areas. A super-commuter area is one in which people make a conscious decision to commute farther than they ever have before. A super commuter may drive an hour each way to work each day, because they want that higher quality of life, they want that lower home price, and it delivers on that promise. And rural areas are no different, people are willing to drive far, far out. They might even drive an hour and a half each way every day to go to a charming school, have more land and more house for their dollar. So the future of storage, as evidenced by the U-Haul report simply is you got to start looking farther out. Look at areas that are not in the urban center, look for areas that people are commuting to outside of the urban center.
That's number one. Number two, start looking out of the old broken, monotonous playbook of hot markets. When someone tells me, "Oh, I'm looking at something in a hot market," it repels me. Because when you think something is hot, you're on the edge of edge of despair. That's typically when you fall off the cliff. You want to be in markets which become hot, not which already are hot. You want places that are not yet been labeled as the place to be, because that means when you're not labeled as the place to be, there's less competition, which means you can buy things at lower prices. And typically those investments perform well. The bottom line to it all is the self storage industry, like all industries, is constantly changing, constantly morphing. Smart storage buyers are aware of this and are constantly grasping for information, trying to get data, trying to see where to go, what to do. Because you always want to be in the front of all those different kinds of mega trends. You don't want to be following on those. You want to be like a surfer. You want to ride what's hot, what's fresh, what's different, the big trends, you want to surf those things.
That's where the real money is. And when you're out there looking for information annually, I would look at that U-Haul report of one-way moves, because there's always interesting tidbits of knowledge you can get from everything that you see, read, watch on TV. And it's the sum of all of that data that helps you make the best decisions. This is Frank Rolf, the Self Storage University Podcast. Hope you enjoy this. Talk to you again soon.