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Elevated Housing Costs Driving Homebuyers to More Affordable Areas

The number of Redfin.com home searchers looking to relocate to a new metro fell 4.2% from a year earlier in Q1, compared with a 15.6% drop for those looking to move within their current metro, marking the biggest drops in Redfin’s records.

Key Findings:

  • Redfin.com home searches in out-of-town destinations have dropped 4% from a year ago, compared with a 16% drop for searches near home.
  • Migration is holding up relatively well because high housing costs are pushing homebuyers to more affordable places, which is also the reason why a record one-quarter of home searchers are looking to move to a new metro.
  • Immigration has rebounded from pandemic lows, with many people flowing into big coastal cities like San Francisco and New York from other countries. But while those places are gaining some residents, they’re losing many homebuyers who are flowing to more affordable parts of the U.S.
  • Half of the most popular destinations are in Florida, and all are in the Sun Belt. Most are more affordable than the places people are coming from.

Far-flung home searches have held up better than within-metro searches as the overall housing market slows from the pandemic homebuying boom. That’s largely because high mortgage rates, still-high home prices and inflation have driven many homebuyers–especially remote workers with freedom to move–to less expensive areas. Relatively affordable places like Phoenix, Las Vegas and parts of Florida are some of the nation’s most popular destinations.

“Las Vegas attracts a lot of homebuyers from California, Hawaii, Washington State and other expensive western places,” said Las Vegas Redfin agent Shay Stein. “For most of these buyers, it’s all about affordability: We have no state income tax, very low property taxes and an overall low cost of living. Plus, some people moving in from out of town have enough in their bank account to pay all cash, so today’s elevated rates don’t impact them.”

Home searches outside a homebuyer’s metro surged in late 2020 and early 2021 as remote workers pounced on low mortgage rates and the opportunity to work remotely. Close-to-home searches shot up, too, but not nearly as much.

House hunters moving to a new area make up a bigger piece of the homebuying pie than ever. A record one-quarter (25.1%) of Redfin.com home searchers looked to relocate to a new metro in the first quarter. That’s up from 22.8% a year earlier and around 18% before the pandemic.

Top 10 Metros Homebuyers Are Leaving:

  1. San Francisco
  2. New York
  3. Los Angeles
  4. Washington, D.C.
  5. Boston
  6. Seattle
  7. Chicago
  8. Denver
  9. Hartford, CT
  10. Minneapolis, MN

Top 10 Metros Homebuyers Are Moving Into:

  1. Miami
  2. Phoenix
  3. Las Vegas
  4. Tampa, FL
  5. Orlando, FL
  6. Sacramento, CA
  7. Cape Coral, FL
  8. North Port-Sarasota, FL
  9. Dallas
  10. Houston

Immigration rebounds from pandemic slump in coastal cities, partly offsetting trend of homebuyers leaving for more affordable places

Immigration into major U.S. coastal cities like New York and Los Angeles has rebounded after dramatically dropping off in 2020 and 2021. The uptick in people moving in from other countries partly makes up for the homebuyers flowing out of those areas, typically to more affordable places.

The net inflow of immigrants more than doubled from a year earlier in 2022 in San Francisco, New York, Los Angeles, Washington, D.C., and Boston. That’s according to a Redfin analysis of U.S. Census data, which shows that immigration into many big American cities has picked up speed after the pandemic-driven slowdown.

Immigrants are flowing into expensive coastal job centers, the same places homebuyers who are already based in the U.S. are leaving.

House hunters looked to leave San Francisco, New York and Los Angeles more than any other major metro in the first quarter, followed by Washington, D.C. and Boston. This ranking is determined by net outflow, a measure of how many more Redfin.com users looked to leave a metro than move in.

“Several years of declining immigration, compounded by Americans flowing out of big coastal cities during the pandemic, resulted in many major coastal cities losing population,” said Redfin Deputy Chief Economist Taylor Marr. “Last year’s immigration rebound was a boon for those cities, which take in most of the people who move to the U.S. from other countries. For the housing and rental markets, the recovery should add enough demand to at least partly make up for the existing residents who move further inland.”

To read the full report, including more data, charts and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].

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