layer shifts when I add a transition, or just fade in/out.

[AdamAnonymous]

At the center of the transition, the layer underneath will shift slightly, even though there are no keyframe changes. I'm using some very high resolution photos (8000x5333), and I've seen similar issues pop up in those cases (lagging as well). Do I just need to downsize the photos? 

[Ann Bens]

You definitely need to downsize, but not sure if it will solve the issue.

Is your footage constant framerate or variable framerate. The latter can cause issues.

[AdamAnonymous]

.jpg's!

[Peru Bob]

Delete the Media Cache and Media Cache files:
https://community.adobe.com/t5/premiere-pro/faq-how-to-clear-your-media-cache-in-30-seconds-in-premi...

If that doesn't work, try resetting the preferences:
https://community.adobe.com/t5/premiere-pro/faq-how-to-reset-trash-preferences-in-premiere-pro/td-p/...

If that doesn't work, try resetting the Workspaces:
Reset a workspace
Reset the current workspace to return to its original, saved layout of panels.
1. Do one of the following:
• Click the Workspace menu icon and select Reset to Saved Layout.
• Choose Window > Workspace > Reset to Saved Layout.
from here:
https://helpx.adobe.com/premiere-pro/using/workspaces.html

If that doesn't work, try Preferences > Audio Hardware and set Input to None.

If that doesn’t work, try updating or rolling back your graphics driver directly from the video card manufacturer’s site. If NVIDIA, do a clean installation of the latest Studio Driver (NOT the Game Driver).

If that doesn't work, try creating a new project and import the old one into it.
.

[AdamAnonymous]

I cut the image sizes in half and it did the trick. I've googled a bit, but can't find a technical answer for why it happens. I'd assume system lag, but why is the shift visible in the exports?

[Peru Bob]

 I'm using some very high resolution photos (8000x5333),  Do I just need to downsize the photos? 

By @AdamAnonymous

Probably, as suggested by Ann Bens . 

What is the sequence size? 

Are you zooming in? If so, how much?

[AdamAnonymous]

1920x1080, and I'm generaly not zooming in to more than 100%.