The housing market has slowed following a pandemic-driven buying frenzy, with home sales falling and supply starting to rise due to rising mortgage rates, high home prices, inflation, and a faltering economy.
According to a new report from Redfin, a record 32.6% of Redfin.com users nationwide looked to move from one metro to another in Q2, up slightly from 32.3% in Q1 —and roughly 26% before the pandemic.
Americans who can still afford to buy continue to relocate at unprecedented levels, largely because surging housing costs are putting expensive metros further out of reach, making relatively affordable cities like Tampa and San Antonio more attractive.
“The typical home in San Francisco or San Jose now costs more than $1.5 million. Add in today’s 5%-plus mortgage rates and you have a sky-high monthly payment,” said Redfin Deputy Chief Economist Taylor Marr. “Those factors, along with more companies giving employees the permanent flexibility to work remotely, are driving a larger portion of buyers to consider homes in other parts of the country. Someone who would have to stretch beyond their budget in Los Angeles may be able to comfortably afford a home in Phoenix or San Antonio.”
Florida Seeing More Homebuyers Move In Than A Year Ago
Miami was the most popular migration destination in Q2, unchanged from Q1. Popularity is measured by net inflow, or how many more Redfin.com users looked to move into an area than leave.
Another Florida metro, Tampa, came in second, followed by Phoenix, Sacramento, and Las Vegas. Cape Coral, Florida, San Diego, North Port, Florida, San Antonio, and Dallas round out the top 10. Warm, Sun Belt metros are perennial favorites for relocators.
Migration into Florida continues to pick up, with net inflow into Miami, Tampa, Cape Coral and North Port higher than it was a year earlier. New York and Chicago are the most common origins of homebuyers looking to move into those metros.
“Tampa is still attracting a lot of out-of-state homebuyers, coming from places like New York, who can get more for their money in Florida,” said Eric Auciello, a Redfin manager in Tampa. “The spike in mortgage rates has priced some buyers out of the market, but it has also helped ease competition and curb bidding wars between locals and out of towners. A lot of buyers who kept getting outbid at the peak of the market are now getting their offers accepted, and in some cases they’re even able to use FHA loans, make smaller down payments and keep the appraisal contingency.”
That marks a shift from the height of the pandemic buying frenzy, when sellers were often more likely to accept offers that used conventional loans and waived contingencies.
Movement into San Diego and San Antonio is also on the upswing, with higher net inflow in Q2 than a year earlier. Los Angeles is a common origin for people relocating to both of those places.
Meanwhile, net inflow into Phoenix, Sacramento, Las Vegas and Dallas has started to slow down from last year. That’s partly because home prices have risen so much in those areas, taking them from relatively affordable to not-so-affordable. Prices in Phoenix, for instance, rose 20% year-over-year to $485,000 in June, and in Las Vegas they rose 23% to $450,000. Still, these places are significantly more affordable than coastal hubs like San Francisco and New York.
Migration Out Of San Francisco Increasing, While Migration Out Of New York Declining
San Francisco had the highest net outflow of any major U.S. metro in Q2, unchanged from Q1. Los Angeles, New York, Washington, D.C., and Seattle round out the top five; it’s typical that homebuyers look to move out of expensive job centers.
As permanent remote work becomes the norm for many workers, even more homebuyers are moving out of most of those expensive cities than a year ago. Net outflow increased year-over-year in four of the five top places people are leaving. One exception is New York, where outflow is slowing.
To read the full report, including more details, charts and methodology, click here.