It is well-established that the back half of 2020 and, so far, 2021 have been periods of increased activity in the housing market.
With a pandemic forcing folks to work from home and households seeking more space, not to mention all-time low mortgage rates, many homeowners are opting to relocate—but what factors are really driving them and where are they going?
Recent data from CoreLogic found that affordability, job opportunity, and outdoor amenities are major driving factors of relocation these days.
CoreLogic's data, collected April through December 2020 showed most migrating homebuyers choosing metros that are either adjacent to their current location, had a lower cost of living, or both.
In ranking the metros with the most outbound migration, CoreLogic found that large coastal areas were losing the most homeowning residents.
New York saw the highest net out-migration of homebuyers among all the metros over the last year, followed by Los Angeles, San Francisco, and San Jose. The net out vs. in ratio was higher in all the top 10 metros compared to the same period in 2019.
Metro Areas Based on Their Net In-Migration and Out-Migration of Homebuyers in 2020:
"For example, for each incoming home-purchase application to New York, there were almost six potential homebuyers moving out of New York in 2020, a ratio of 5.7 in 2020 compared to 4.2 in 2019," according to CoreLogic's Principal Economist Archana Pradhan. "New York lost a good share of its potential homebuyers to affordable neighboring metros, such as Philadelphia, Bridgeport, Poughkeepsie, and Allentown, and warmer metros, such as Miami, Atlanta, Tampa, and Charlotte. It is important to note, 81% of New York-based potential homebuyers stayed in New York."
On the other side of the spectrum, Riverside, California, had the highest in-migration activity, followed by Lakeland, Myrtle Beach, and Las Vegas.
How unusual is this reported shift of migration away from high-cost, large metro areas? In a separate migration report, the Federal Reserve Bank of Cleveland showed an increased net migration out of high-cost, large metro areas during the pandemic was not a repeat of something that happened during the Great Recession but, according to Policy Economist Stephen Whitaker, "rather a rapid acceleration of a trend emerging during the previous expansion."
Net Out-Migration from High-Cost, Large Metro Areas to Other Types of Regions:
Backing up CoreLogic's data, Whitaker writes, "it is not surprising then that the big 'winners' from the changes in net migration during the pandemic are smaller metro areas near the high-cost, large metro areas."
Whitaker, examining data featured in full here, anticipates what the migration trends could mean insofar as regional economic activity.
"Out-migration from high-cost, large metro areas would have to increase substantially to reach levels that could have an impact on lower-cost and less-populated regions," he pointed out. "We see that most of the regions that have gained additional migrants during the pandemic have gained only a fraction of 1% of their labor force—also, not all migrants will be in the labor force. However, if the recent experience with telework opens the possibility of moving for hundreds of thousands of professionals, the potential gains are substantial. Attracting even a fraction of these remote workers to a region could bring more economic activity than attracting several large employers."