Redfin: Migration to Low-Tax Metros Accelerating

Redfin, Seattle, reported people in expensive, high-tax coastal markets increased their searches for homes in lower-cost, inland metros during the second quarter.

The company’s quarterly Migration Report said nationally, 24 percent of home searchers looked to move to another metro area in the second quarter, compared to 21 percent during the same period last year. Anecdotally, the report said home searchers in San Francisco, New York, Los Angeles and Washington, D.C. searched for homes in metros such as Phoenix, Las Vegas and Miami, where taxes are lower and housing is more affordable.

“With home prices reaching new heights in many metro areas, it’s no surprise people are continuing to move away from expensive metros in search of homeownership,” said Taylor Marr, Redfin senior economist. “Last year’s tax reform poured fuel on the fire. By capping mortgage interest and state and local tax deductions, there is an even greater incentive for homebuyers to consider moving to a lower-tax state.”

The report said the average local tax burden was three-times lower in the top-10 migration destinations than in the 10 places people were most commonly leaving last quarter. Other report data:

–8% of people said they shifted their search to a state with lower taxes due to the new tax law.

–9% said they shifted their search to nearby cities with lower taxes.

–10% said they bought a less expensive home because of the decreased benefits on high-priced homes.

–10% bought a more expensive home because their after-tax income grew.

“Now that homeowners and prospective buyers have had some time to understand how the new tax laws are affecting their finances, we are starting to see an impact on migration trends,” Marr said.

The report said of all Bay Area residents using Redfin, 22 percent were searching for homes in another metro, up from 19 percent during the same time period a year earlier. Of New Yorkers, 36 percent looked to leave compared to 35 percent last year. Of Los Angelenos, 16 percent looked to leave, compared to 15 percent last year.

As in the first quarter, Phoenix again had the highest net inflow in the analysis. Thirty-four percent of home searchers in Phoenix in the second quarter were from elsewhere, up from 31 percent during the same period last year. The top origin of Phoenix migrants was Los Angeles (25% of inbound searches), followed by Seattle (14%), Chicago (8%), the Bay Area (8%) and New York (5%). Marr said Phoenix is also more affordable, with a median home list price of $275,000 in July, compared to $410,000 in Denver and $565,000 in Seattle.

Las Vegas, another low-tax haven, had the highest share of non-local searches. Forty-one percent of the people searching for homes in Las Vegas were searching from outside the metro area. Nearly 40 percent of these inbound searches originated in Los Angeles, followed by the San Francisco Bay Area (12%), Portland (8%) and Seattle (5%). Redfin said the influx of new residents to the area is causing prices and competition to accelerate. Median home prices in Las Vegas rose by 11 percent in July year over year, marking 17 months in a row of double-digit price growth.

The report noted in Las Vegas, the typical homeowner pays $1,500 (0.8%) in property taxes and 8 percent in local sales taxes, with no state income tax, whereas in Los Angeles, the respective amounts are $3,600 (0.8%) property taxes, 9 percent sales tax rate and 8 percent state income tax rate.

The report can be accessed at