A Record Share of Homebuyers Are Relocating to Less Expensive Cities
As a result, there are early signs of a housing-market slowdown in expensive coastal markets.
Skyrocketing home prices and rising mortgage rates have made relocating to a more affordable area the only viable option for some prospective homebuyers.
Nearly one-third (32.3%) of Redfin users looked to move away from their hometown in the first quarter, an all-time high, according to a new report from the real estate brokerage.
That represents an increase from 31.5% a year earlier and up significantly from 26% in 2019.
The share of homebuyers looking to relocate picked up in mid-2020 as the pandemic took hold, and it has remained elevated since then, according to the report.
The combination of last year’s record-low mortgage rates and remote work encouraged many Americans to relocate.
Today, it is the steadily increasing home prices, along with quickly rising mortgage rates, that are driving the market. And as more homebuyers move away from pricey coastal areas, including San Francisco, Los Angeles, Seattle and Boston, Redfin is seeing early signs of a housing-market slowdown in those metros.
Homebuyers Leaving Seattle at Faster Rate
For example, homebuyers leaving the Seattle area have picked up significantly over the last two years.
The typical home in Seattle sold for $750,000 in February (up 15% year over year), making it the eighth-most expensive major metro in the US, behind only coastal California. Those soaring home prices, combined with a high concentration of tech jobs–which can typically be done remotely–have encouraged many Seattleites to seek more affordable markets.
At the same time, would-be homebuyers leaving Seattle is one reason why its housing market is showing early signs of cooling, with a slowdown in the number of buyers contacting Redfin agents in 2022 compared to last year and a year-over-year decline in mortgage applications.
Seattle had a net outflow of nearly 24,000 Redfin residents in the first quarter, up from about 10,000 a year earlier and about 4,000 two years earlier, before the pandemic began.
Phoenix is the number-one destination for Redfin users leaving Seattle. While Phoenix home prices are up significantly from a year ago, the $456,000 median is still far lower than Seattle’s.
Seattle had the fifth-biggest outflow of any major US metro in the first quarter, behind the Bay Area, Los Angeles, New York and Washington, D.C.
Miami a Top Migration Destination
Miami was the most popular migration destination in the first quarter, unchanged from the second half of 2021. Phoenix, Tampa, Sacramento and Las Vegas round out the top five most popular migration destinations.
The number of residents flowing into Miami in the first quarter was up nearly sixfold from two years earlier, and it has almost tripled in Tampa and almost doubled in Sacramento.