BAM Key Details:
- A new Redfin report shows a record share of home buyers on Redfin.com looking to relocate as high housing costs drive 24.9% of them to more affordable metros.
- Miami is the number one migration destination by net inflow while San Francisco, Los Angeles, and New York rank as the top three migration origins by net outflow.
- The share of relocating home buyers is 0.4% higher than Q4 2022 and up from 22.8% a year ago and about 18% before the pandemic.
Miami has reclaimed its status as the most popular destination for relocating home buyers.
A new Redfin report shows a record 24.9% of home searchers on Redfin.com looking to relocate, with five of the ten most popular metros located in Florida.
Remote work and high housing costs have been driving more home buyers to leave pricer metros for more affordable ones, and Redfin’s analysis over the past several months shows a steadily climbing share of home buyers searching for homes outside their current metro.
With current 30-year fixed mortgage rates hovering around 6.85% and expected to decline by year’s end, more home buyers are putting their homeowner aspirations on hold.
The share of determined home buyers looking to relocate has increased 0.4% from Q4 2022 and is up from 22.8% a year ago and about 18% before the pandemic.
Source: Redfin
Miami reclaims its status as the number one migration destination
In January 2023, Miami was the number one migration destination by net inflow, reclaiming the top spot for the first time since August 2022. Net inflow measures the number of home buyers looking to move into a metro, minus the number looking to move out of it.
Here are the top 10 metros home buyers are moving into, based on net inflow:
- Miami, FL
- Sacramento, CA
- Las Vegas, NV
- Phoenix, AZ
- Tampa, FL
- Dallas, TX
- Cape Coral, FL
- Orlando, FL
- North Port – Sarasota, FL
- Houston, TX
Five of the top 10 most popular migration destinations are located in Florida, a state well known for its warmer weather and abundance of beachfront real estate. It’s worth pointing out, here, that homes in Florida aren’t cheap. In January, the typical home in Miami sold for $470,000, which is well above the $383,000 national median—but still far more affordable than the typical homes in the metros folks are leaving.
Take New York, for example, which is the number one origin metro for home buyers relocating to Miami. The typical NYC home sold for $650,000 in January.
It also helps that Florida’s overall cost of living is lower because there’s no state income tax. Over the last several months, out-of-town home buyers have flooded into coastal Florida. And buyers moving in from metros like New York and San Francisco are helping these Florida markets recover from last fall’s downturn.
Home buyers migrating to Florida aren’t fazed as easily by high mortgage rates because Florida is so much more affordable than their previous hometowns. They get larger lots with pools, along with nice weather and lower taxes.
Sacramento, Las Vegas, and Phoenix take spots two, three, and four on the most popular destinations list, mainly because home buyers moving out of pricey coastal metros can find bigger homes for lower prices without giving up warm climates.
The typical home in eight of the top 10 migration destinations is less expensive than the typical home in each metro’s most common origin.
That said, with the widespread decline in overall buyer demand, compared to a year ago (i.e., January 2022), fewer Redfin.com users looked to move to eight of those most popular metros compared to a year ago.
High housing costs drive buyers to more affordable metros
Elevated mortgage rates have convinced many would-be home buyers in the U.S. to take a step from the market, resulting in a significant drop in home sales from a year ago.
The typical monthly mortgage payment is up 26% from what it was a year ago, thanks to mortgage rates hovering near the 20-year high hit last November.
Among those still determined to buy, though, a record share are planning to relocate, largely due to ongoing affordability challenges—both from those high rates and from home prices that remain high due to low inventory.
Throw in the rising price of gas, groceries, and services, thanks to inflation, and it’s easy to see how the appeal of relatively affordable housing markets could grow—especially for remote workers who are able to relocate without changing jobs.
While home prices went up last year in many popular migration destinations, those same metros are now seeing the fastest declines in home prices. And they’re still much more affordable than the metros people are leaving.
Los Angeles, for example, where the typical home sells for around $800,000, was the number one origin metro for home buyers moving to Las Vegas and Dallas—two popular metros where the typical home currently sells for about half that amount.
Source: Redfin
Here are the top 10 metros home buyers are leaving, based on net outflow:
- San Francisco, CA
- Los Angeles, CA
- New York, NY
- Washington, D.C.
- Chicago, IL
- Boston, MA
- Seattle, WA
- Denver, CO
- Hartford, CT
- Detroit, MI
Top takeaways for real estate agents
If you serve one of the top migration destinations, prepare yourself with the data and information your out-of-town clients will need to find and purchase the best and most affordable home for them. Always be truthful and upfront about market conditions.
Building trust should always come before making a sale. This is why the best real estate agents play the long game, putting people before profits. Ask yourself what information you would be looking for if you planned to move to a different metro area.
Research doesn’t stop with the internet, though. The more people you talk to every day, the more you know their biggest questions and concerns.
Make it your goal to become your clients’ most trustworthy guide on the housing market.
