A new Redfin report shows a record 33.9% of homeowners using Redfin.com relocating from one metro to another in July and August.
Redfin started tracking migration data in 2017, and 33.9% is the highest recorded share of relocating buyers. Home sales are down 20% from a year earlier, and both buyer demand and seller activity have slowed considerably since the buying frenzy of the previous year.
Behind the migration
All three factors combined have priced many would-be buyers out of the market, cooling demand and shrinking the number of offers sellers can expect.
Sliding stock futures don’t help, either. And as the Fed raised interest rates for the third consecutive time, consumers are understandably worried.
The overall slowdown and the popularity of relocating are both due to high home prices and mortgage rates that have doubled since last year. Six percent mortgage rates are exacerbating already-high home prices and motivating home buyers—especially remote workers—to leave expensive areas for more affordable ones. Persistent inflation and slumping stocks are also cutting into buyers’ budgets, making relatively affordable areas even more attractive.
Where is net outflow highest?
Compared to last year, more homebuyers are migrating out of Los Angeles, New York, Washington, D.C., and Boston in search of more affordable metro areas.
High mortgage rates and high inflation rates have made living in these areas much more expensive, especially since home values are also rising.
More Redfin users left the Bay Area during July and August than any other U.S. metro. But because this is one of the only places where home prices are dropping (year-over-year), giving homeowners some relief, the number of those leaving has declined.
Sun Belt metros most popular with relocating homebuyers
At the number one spot for over a year, Miami ranked as the most popular migration destination for Redfin users. Popularity is measured by the net inflow of homebuyers—meaning how many more people looked to move into an area than out of it.
Next on the list were Sacramento, a perennial favorite for migrating homebuyers, and San Diego, which only recently made the list.
See the table below for the complete list.
Nine out of ten are Sun Belt metros, with Portland being the exception. Eight have median sale prices lower than $500K. Sacramento ($570K) and San Diego ($800K) are the exceptions.
Six are located in areas with no state income tax, which reduces the overall cost of living.
What you can do
Every area of the U.S. has pros and cons. Whatever your local market is going through right now, collect the data you need to give your clients and community a comprehensive view of its challenges and opportunities.
Be your community’s best advocate and resource, so they know who to turn to when the latest headlines make them nervous.