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Practicing In Areas That Are Losing Population

Podcast
January 10, 20238 min read

Practicing In Areas That Are Losing Population

It might be desirable to concentrate only on those locations that are growing when choosing a place to practice. Still, that isn't always the best choice. Some areas may not be increasing in size, but they have favorable demographics (such as employment, age, or income). The locations that are showing "out-migration" are the ones we see as having the most risk. Three of these were once growing but have reversed their trends.  These include Oregon, Washington, and Colorado. 

This episode describes just WHY these formerly thriving places are losing population (surprisingly). Some of these sites are pricing themselves out of the market. Of particular note is the very high tax rate we are seeing.  This has particularly surprised demographic experts at the speed of the effects on population and employment.  The market has fallen very rapidly. No one seems to know when these trends will be stabilized.

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Scott McDonald: Hello, this is Scott McDonald with Doctor Demographics, and I want to talk to you a little bit about a phenomenon we refer to as outmigration. It's simple enough. It means the population in the area is going down. The more dense an area is and it's growing well, that's generally a good thing. But really dense areas tend not to grow very much. They're usually more modest in increasing the population. Now, natural migration refers to how many babies are being born and whether immigrants are moving to a particular location. It's considered a good thing. So practices that have a natural migration inward, well, that's a good a good phenomenon. If you happen to be a moving company right now, they're showing statistics like it. You all that suggest it is not growing very fast and that people are tending to move away. It means the cost of renting a moving van is getting higher in those locations that are not increasing in size. Now we know that certain locations, certain states have had a long term trend of people moving out. As an example, Illinois, particularly in Chicagoland, is not increasing in its size. In fact, it's fairly stagnant, but it's stagnant for a lot of different reasons. You probably know that the crime rate in Chicago land is much higher than it is in surrounding areas and in other parts of the United States. 

Scott McDonald: But it's also true that there are some surprises in the statistics, and I'd like to talk to you about it as an example. California, which has never lost a congressional district, has lost one this time around. People are not moving to California. And we have to ask ourselves why? Why isn't California increasing in size? Why don't people want to go there? Well, the numbers are reflective of what the trends you probably know about are. It's expensive to live in California. They're not allowing citizens to build homes. The available space is actually going down. So with this and I'll talk about some more trends on this a little later, but Illinois and California are reducing their size and they have a net migration outward. We already know that West Virginia has been losing a significant number of people, even though it's an energy state. People don't want to live there. Now that's true. Then, of course, parts of New York State, California, Illinois, as I mentioned. But there are three other states that are losing population that were traditionally gaining population. And therefore, we're a little worried about them as a place for you to consider putting a practice. So as an example, Oregon, Washington and Colorado, all three had been growing. And right now they're losing population. If you were to look at the numbers offered by U-Haul, the company that does move it, moving in property, renting vans and things, it's becoming far more expensive to rent from U-Haul than it was traditionally.

Scott McDonald: And this is causing people a lot of concerns. With that in mind, we have to say it's not as though you can't make a living moving a practice in these sites, but it's riskier. And that's the real point of out migrations there, riskier than they were before. And we want to say doctors, be careful. So let's talk about some of the other numbers that go into this so you can make a good decision on where to go. Now, remember, outmigration just means that there are a lot of people leaving. And when people and businesses pack up and leave a location, they call it outmigration. And it's not a good thing. It's usually it means that the property values and the employment rates are dropping. So with less employment, less affluence, fewer new houses moving into this area, it makes outmigration a negative indicator for you. Generally, outmigration are seen as a bad thing. Illinois went through one. Then Southern California's are experiencing one right now. But these are not the only places that are in danger. There are several places, and sometimes it's not entire states, but parts of states that are making it difficult to move to.

Scott McDonald: And definitely difficult to set up a practice. Now migration. I want you to keep in mind no area is immune to outmigration. Many places are growing that way. There are many potential reasons for it, including the high cost of living and the price of housing, which is the same thing as the high cost of living. Median family income that cannot afford a middle class lifestyle. Is making a lot of people leave as well. So they can't just be in the middle anymore. You either have to be very wealthy to to get a house and not much else. The high taxes are also being a real problem, causing outmigration and the list goes on. Well, a couple of other things. The availability of any house is affecting people right now. High crime rates are also causing a lot of people to leave. Suburban areas that traditionally were strong are not so strong anymore. 3.5 million Californians have left the state over the last 20 years. Corporate relocations are meaning that employment rates and the amount of money those corporations were paying are also going down. I'm not saying we're doomed, but there are a lot of people who are worried and people who would normally have said, That's where I want to go or having a hard time going there. So Washington, Colorado and Oregon are looking bad, particularly in the west side of Washington and Oregon.

Scott McDonald: Colorado is not doing well, particularly in the in the big cities of Denver, around Denver. Now. Losses are a bit of a surprise and go against traditional reasoning. Just be aware of it. Oregon is the smallest of the three, with 4.2 million residents. And like Colorado, Washington and Oregon were among the top ten net domestic migration destinations early in 2010. But no longer what was making them good is making them riskier now. Oregon peaked at a net domestic migration figure of 51,000 in 2016. By 2021, net domestic migration fell had fallen to 10,000. Now. At a at a -17,000 rate in 2022. Now, you may say, oh, well, you know, we're not Japan, which has a very low birth rate. Unfortunately, it's at 1.39. Remember to stay stable. The population needs 2.5 population, maybe as low as 2.1. But these areas are not doing well now. Japan is notoriously slow with its TFR, and a lot of people are saying what's going to be the bottom of the trend? And I can't tell you I'm a little nervous about it. Now Oregon and Japan. As you can see, Japan seems to be doing okay, but Oregon is dropping its rate so fast that by 2020, no one has any idea what the bottom of the market looks like.

Scott McDonald: People are not having children. Few demographers anticipated declines like this with their far smaller populations. Washington, Colorado and Oregon are unlikely to rival the net domestic migration losses of California. But all three states could be facing a future substantial outmigration this year. Now this is a very confusing part. Chart. I will only say urban containment effects mean that the area is getting more dense and less likely to support where people are are going to be going. Outmigration peaks, in fact, and at a part closer to an urban center, urban areas are not growing. That's the trend. Now, differences in the cost of living largely reflect housing cost differences. And the major three metropolitan areas in the housing markets of Washington, Colorado and Oregon have seen about a doubling of their median house values relative to median household incomes in the last quarter century. Middle income houses are less likely to move to where a middle income lifestyle cannot be afforded. So. If there is more middle class housing, people will move there. But without it, they're kind of doomed. And the urban areas are not doing well. This is Scott McDonald and Dr. Demographics, please call us at 800 8490499. If you're looking for the perfect place to put a practice, we can help you. And thanks so much for watching. Bye bye.

 

 

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Scott McDonald

Scott McDonald is the founder of Doctor Demographics, LLC, a firm specializing in marketing analysis services and research for professional practices. The company has been serving general and specialty practices for over 30 years and is the largest provider of detailed demographic and marketing analysis to healthcare practices in the United States. Scott also runs Scott McDonald & Associates, Inc. which is the speaking/consulting arm of Doctor Demographics. Programs are offered to study clubs, component and constituent societies of organized medicine and dentistry as well as consulting firms, national vendors, and government organizations. Scott is the former Marketing Manager for the California Dental Association. He helped start organized dentistry’s first efforts in public relations and advertising shortly after the regulations of professional marketing changed in 1977. Since that time he has worked with healthcare practices and associations across the U.S. and Europe. During his career, Scott McDonald has set the standard for market research, demographic and psychographic applications for dentistry. He has written many articles for the professions as well as for national and state dental organizations on the topic. As a lecturer, facilitator and moderator for dental organizations, Scott has helped volunteer leaders in more than 200 societies and associations with strategic planning and organizational communications. In 2015 he was a featured speaker at the American Association of Orthodontics national meeting as well as the American Veterinary Medical Association annual conference. At national and regional meetings he has addressed the topics of site analysis, demographic trends, and referral base promotional activities. Scott received his Master of Arts degree from Brigham Young University in Mass Communications. His thesis was on the theories and best practices of professional practice advertising, public relations, and site analysis. He resides with his family in Lehi, Utah. Scott is the father of 5 children (and grandfather of four). He is the Past-President of the National Speaker’s Association, Sacramento Chapter. Other programs include “Healing the Breach: Broken Referral Systems,” “Gripe! Gripe? Gripe! Getting Along With Difficult People,” and “Professional Practice Persuasion Techniques and Theories.”

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Scott McDonald

"Demographics is more than just facts and figures. It is the foundational story in which we develop the right strategy and plan to create successful practices over the long-term. Markets change, economies fluctuate, and internal goals differ. Our goal at Doctor Demographics is to provide you with not just the data, but experienced analysis to help you create the practice you've always dreamed of having."

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