Migration Trends Accelerate as More Leave High-Price Housing Markets

More people are moving from high-cost housing areas such as Denver, San Francisco and Los Angeles to affordable, low-tax inland job centers in states such as Florida, Texas and Tennessee, said Redfin, Seattle.

The Redfin analysis of one million Redfin.com users who searched for homes across 80 metro areas from July through September found in the third quarter people moved away from high-cost coastal markets in increasing numbers. Meanwhile, more affordable areas such as Sacramento, Atlanta and Phoenix continued to draw thousands of potential new residents.

Nationally, 25 percent of Redfin.com home searchers looked to move to another metro area in the third quarter, compared to 22 percent during the same period last year. Affordability continues to be a driving factor causing people to move away from the coasts, said Redfin chief economist Daryl Fairweather.

“Rising mortgage rates are exacerbating affordability issues that have been driving people out of expensive coastal metros for the past few years,” Fairweather said. “With rates no longer near historic lows, buyers are increasingly cost-conscious, seeking more affordable homes in low-tax states in the South and middle of the country.”

San Francisco, New York, Los Angeles, Washington, D.C. and Denver posted the highest net outflows in the third quarter, Redfin said. After debuting on the list of top 10 metro areas with a net outflow at number seven in the first quarter and moving up to number six in the second quarter, Denver moved up again in the third quarter to pass Chicago at number five. Of all Denverites using Redfin, 24 percent were searching for homes in another metro, up from 17 percent during the same time period a year earlier. Among the Denverites who were searching elsewhere, 23 percent were looking at more affordable metros within the state, such as Colorado Springs and Fort Collins.

Of all San Francisco Bay Area residents using Redfin, 22 percent were searching for homes in another metro, up from 18 percent during the same time period a year earlier. Of New Yorkers, 34 percent looked to leave, about the same as last year. Of Los Angelenos, 16 percent looked to leave, compared to 15 percent last year.

Redfin said the places attracting the most people are mostly the same regions that have been growing throughout the past year, including Sacramento, Atlanta, Phoenix and Portland. Metro areas seeing the biggest inflows of new residents are the big cities where home prices are still relatively affordable and job markets are strong. Median prices in the metro areas seeing the largest net inflow average around $150,000 below prices in the metro areas with the largest net outflow.

“We talk with a lot of people moving to Atlanta from areas experiencing more of a slowdown, and they seem to think Atlanta is too good to be true,” said Atlanta Redfin agent Ashley Ward. “Benefits of Atlanta that keep drawing people here include top-notch public education, affordable housing, an appreciating market and more job opportunities.”

The analysis is available at https://www.redfin.com/blog/2018/10/q3-2018-migration-report.html.