In a new article written by Jaiyi Xu an economist for Realtor.com, Xu revealed that more shoppers are looking for homes in areas well outside of the areas they currently reside during the first quarter of 2023 as 56.9% of listing views on Realtor.com’s platform from the top-100 metropolitan areas navigated towards listings in other metropolatian areas. This was an increase from the fourth quarter of 2022 and year-over-year.
So where are shoppers looking to leave in the largest numbers? According to Realtor.com’s data, western shoppers are the most likely to look for out-of-market homes, but Northeastern shoppers sit closely behind in second place. Sixty-seven percent of out-of-metro traffic from the top-100 markets gravitated towards metros areas with higher homeownership rates, 1.1 percentage points higher than the same time last year.
In addition, more than half of online views from the West and Northeast flowed into more affordable markets, a share that is 1.4 percentage points higher than a year ago. 58.9% out-of-metro views from the top 100 metros went to markets with warmer climates, 3.0 percentage points higher than last year.
“At 66.2% of out-of-metro views, home shoppers from the West outperformed their peers and became the group that are most likely to search for out-of-metro homes,” Xu said. “Because the West has consistently had the largest share of home shoppers looking elsewhere, it saw the lowest year-over-year change in out-of-market home searching.”
“On the other hand, Northeastern shoppers saw the highest growth in the first quarter, when the share of out-of-market shopping was 4.6 percentage points higher than the prior year,” Xu continued. “Greater growth in cross-market activity in the Northeast has elevated the out-of-market shopping share from roughly on par with the Midwest and South in 2020 to a clear second place in 2023. In all four regions, more than half of online shopping traffic went to homes outside of their metro areas. By comparison, only the Western region had this level of outside shopping interest three years ago.”
Basically, online shoppers are overall looking for homes in metros with higher homeownership rates. According to Realtor.com, in the first quarter of 2023, 67.7% of out-of-metro traffic from the top 100 metros went towards metropolitan areas with higher homeownership rates, a 1.1 percentage points increase than the share 12 months ago. The evolving trend suggests that a growing number of shoppers are exploring markets with lower barriers to entry as a means to gain access to homeownership.
On a regional level, the share of online traffic to metros with lower homeownership rates increased in the West in Northeast compared to a year ago, despite the slight improvements in homeownership rates over the last year. It is not surprising, considering that the homeownership rates in the West (61.9%) and Northeast (62.7%) have been below the national average (66.0%), indicating greater obstacles to homeownership in these markets.
“On the other hand, the South experienced a decrease of 2.4 percentage points in its share of traffic to higher homeownership metros, while the Midwest saw an even more significant decline,” Xu said. “Since homeownership rates are higher in these regions, the diminishing traffic share indicates that buyers may face more challenging conditions, with fewer options of easily accessible markets to choose from.”
“As a result, individuals from the South and Midwest might be forced to enter markets where competition is more intense, thereby exacerbating the difficulties associated with achieving homeownership.”
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