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 pushing folks to work from home and households seeking more space, not to mention all-time low mortgage rates, a record number of homeowners, says Redfin.com, are looking to relocate to a new metropolitan area—but this trend is creating unprecedented issues for those attempting to upgrade or move within their own area.
"With a record share of Redfin.com home searchers looking to move to another metro, out-of-towners are making it difficult for local residents to win bidding wars," says a new report from the technology-powered real estate brokerage. For example, "the average out-of-towner moving to Phoenix, the most-coveted locale for movers, has $630,000 to spend on a home, versus $510,000 for locals."
Nationwide, 31.5% of Redfin users sought to move to a different metro area in the first quarter. That's up from 30.3% in the fourth quarter of 2020 and 26% a year earlier, and the highest share since Redfin started tracking migration in 2017.
"Remote work is here to stay for many Americans. The long-term cultural shift is disseminating money once concentrated on the coasts throughout the country," said Redfin Chief Economist Daryl Fairweather. "Affluent remote workers are able to get more for their money by moving from job centers like the Bay Area to more affordable places like Phoenix and Las Vegas. But local residents looking to buy their first home are losing out because of the big budgets flowing into their hometowns. Many local buyers, particularly those who aren't selling a home to fund their purchase, are being forced to compromise. They're searching for smaller homes in farther-flung neighborhoods, or even dropping out of the search altogether."
The average housing budget for out-of-towners moving to Phoenix, the number-one migration destination for Redfin.com users in Q1, was $627,000, 23% higher than the $510,000 average budget for local buyers.
In Austin, the next-most popular destination, out-of-towners had an average budget of $855,000, 32% higher than the average local budget. Next comes Las Vegas, where the average out-of-towner had a $582,000 budget, 16% higher than locals.
Dallas and Atlanta were the next-most popular destinations for people looking to move to a different area.
Relatively affordable inland metros are typically the most sought-after for Redfin.com users looking to leave their home metro, a trend that has intensified with the pandemic. Net inflow of home searchers has increased significantly from a year ago in all of the top 10 migration destinations.
"Not only are a lot of remote workers moving to Las Vegas, but many people are moving here and bringing their businesses with them, setting up shop in Nevada," said local Redfin real estate agent Lori Garlick. "Inventory is so low that the market is frustrating for locals, first-time buyers, and people who don't have big down payments. Potential buyers are waiting in line to tour anything with a pool and a nice-sized lot. But if a buyer doesn't have a budget big enough to pay over list price and throw in other incentives for the seller, like waiving the appraisal fee, they're just not going to get the house."
Redfin's full report, including the top 10 metros for inflow and outflow, is available at Redfin.com.