Record-High Number of Homebuyers Ready to Move Elsewhere
Redfin, Seattle, said rising mortgage rates and persistently high home prices are motivating many buyers who remain in the market to relocate to more affordable areas.
Nearly one-fourth (24.2%) of homebuyers nationwide looked to move to a different metro area in the third quarter, a record high, according to a Redfin report, up from 23.3% in the second quarter, 21.6% a year ago and about 18% before the pandemic.
The report said affordability is a priority for homebuyers as mortgage rates surpass 7%, more than doubling in the last year. Those high rates, along with inflation and still-high home prices, are discouraging many prospective homebuyers from moving. But those who are still in the market are likely to prioritize living somewhere relatively affordable, like Sacramento or Las Vegas.
“With a recession looming and household expenses high, many people can’t afford to buy a home in an expensive area and/or want to save money in case of an emergency, which makes relocating somewhere more affordable an attractive option,” said Redfin Economics Research Lead Chen Zhao. “Migration will likely slow in the coming months because the softening labor market and job losses will push more people to stay put or move in with family, though some may need to relocate for new employment opportunities. Plus, many remote workers who wanted to relocate already have.”
Sacramento was the most popular destination for Redfin.com users looking to relocate, followed by Miami, Las Vegas, San Diego and Tampa. (Popularity is determined by net inflow, which is the number of people looking to move into a metro minus the number of people looking to leave.) Overall, sunny, relatively affordable areas are typically the most popular relocation destinations.
While Sacramento’s $560,000 median sale price is higher than the national average, it’s a fraction of the $1.5 million median price in nearby San Francisco, the most common origin of newcomers to Sacramento. New York, where the typical home costs $680,000, is the most common origin for buyers moving to Miami ($475,000 median sale price). Nine of the 10 most popular destinations have more affordable home prices than their top origins (Cape Coral, Fla., with Chicago as the most common origin, is the exception).
“More than half of my buyers in Sacramento are from outside the area,” said local Redfin agent Samantha Rahman. “They’re mostly remote workers coming from the Bay Area who may need to commute to the office a few times a month but are saving significantly on housing costs. It makes even more sense to relocate to a more affordable region now than it did when mortgage rates were low, as lower-priced homes offset some of the expense of high rates and rack up less interest.”
More homebuyers looked to leave San Francisco than any other major metro, followed by Los Angeles, New York, Washington, D.C., and Boston. That’s determined by net outflow, a measure of how many more Redfin.com users looked to leave an area than move in.
Homebuyers leaving New York are most commonly searching in Miami, where the weather is warmer and homes are less expensive. And buyers looking to depart Boston are flocking to Portland, Maine, where the typical home costs $200,000 less.
