Key Details:
- A new Redfin report shows the number of home buyers looking to relocate to a different metro declined less in Q1 than buyers searching for homes within their current metro.
- High mortgage rates, elevated home prices, and inflation were still driving home buyers to relatively affordable metros in the first quarter, while immigration has rebounded and partly offset the exodus from pricey coastal metros.
The number of home buyers using Redfin.com to search for homes outside their current metro declined 4.2% from a year ago in the first quarter of 2023, while within-metro home searches fell by 15.6%.
That’s according to a new Redfin report showing buyers are still migrating to more affordable metros, thanks to a combination of high mortgage rates, still elevated home prices, and inflation.
Buyers actively shopping for homes—including remote workers, who have the freedom to relocate to more affordable areas—are still favoring relatively affordable Sun Belt metros.
So, as the overall housing market awaits the Fed’s next move, we’re looking at the top ten metros for inflow and outflow in Q1 2023.
Las Vegas attracts a lot of homebuyers from California, Hawaii, Washington State and other expensive western places. For most of these buyers, it’s all about affordability: We have no state income tax, very low property taxes and an overall low cost of living. Plus, some people moving in from out of town have enough in their bank account to pay all cash, so today’s elevated rates don’t impact them.
Relocating buyers make up a bigger piece of the homebuying pie than ever
In late 2020 and early 2021, Redfin recorded a surge in home searches outside the home buyer’s current metro. Part of the reason for that, of course, was the increase in remote workers taking advantage of their flexibility and low mortgage rates to buy homes in more affordable metros. Within-metro home searches also increased, but less dramatically.
Home shoppers are still looking to relocate to relatively affordable markets, and now, in the first quarter of 2023, they make up a larger piece of the homebuying pie than ever. A record 25.1% of Redfin.com home shoppers looked to relocate to a different metro in Q1. That’s up from 22.8% a year ago and roughly 18% before the pandemic.
High mortgage rates are a big reason for that, as are persistently high home prices and inflation. The combination of those forces has driven more buyers—especially remote workers who aren’t bound to a specific geographical area—to relocate to areas with home prices that take a smaller bite of their income.
Of those relatively affordable destinations, Phoenix, Las Vegas, and parts of Florida are seeing the biggest inflow of migrating homebuyers.
Immigration rebounds in coastal cities, partly offsetting outflow
Even as more buyers look to relocate from pricey coastal metros like New York and Los Angeles, immigration into those cities has rebounded and is partly offsetting the exodus.
After a drastic slowdown in 2020 and 2021, the net inflow of immigrants from other countries more than doubled year over year earlier in 2022 in New York, the Bay Area, Los Angeles, Boston, and Washington, D.C.
A Redfin analysis of U.S. Census data reveals an accelerated flow of immigrants into large American cities—especially pricey coastal job centers, which more U.S.-based homebuyers are leaving. In Q1, San Francisco, New York, and Los Angeles were the top three metros home buyers were looking to leave, followed by Washington D.C. and Boston.
Ranking is based on net outflow—the measure of how many more home shoppers using Redfin.com looked to leave a metro than move into it.
Several years of declining immigration, compounded by Americans flowing out of big coastal cities during the pandemic, resulted in many major coastal cities losing population. Last year’s immigration rebound was a boon for those cities, which take in most of the people who move to the U.S. from other countries. For the housing and rental markets, the recovery should add enough demand to at least partly make up for the existing residents who move further inland.
Sun Belt metros are still the most popular for migrating homebuyers
The most popular destinations for Redfin.com users—based on net inflow—were Miami, Phoenix, Las Vegas, Tampa, and Orlando. Net inflow measures how many more home buyers using Redfin.com looked to move into a metro than leave it.
Sun Belt metros lead in popularity largely due to their relative affordability. The typical home in eight of the top 10 most popular migration destinations costs significantly less than its top origin.
For example, the typical home in Las Vegas sells for about $400,000—less than half the $820,000 median home price in Los Angeles, where many of its new homebuyers come from. Las Vegas home prices have gone up since before the pandemic, but they’re still well below those of Los Angeles.
Buyers are also moving to Sun Belt metros from other countries. In fact, immigration into seven of the top 10 most popular destination cities—Phoenix, Tampa, Orlando, Cape Coral, North Port-Sarasota, Dallas, and Houston—more than doubled from 2021 to 2022.
That said, these metros aren’t drawing nearly as many immigrants as the pricey coastal metros mentioned earlier.
Top ten metros with the biggest inflow of homebuyers in Q1 2023
- Miami, FL—Net inflow: 8,600; Top origin: New York, NY
- Phoenix, AZ—Net inflow: 7,600; Top origin: Seattle, WA
- Las Vegas, NV—Net inflow: 6,600; Top origin: Los Angeles, CA
- Tampa, FL—Net inflow: 6,000; Top origin: New York, NY
- Orlando, FL—Net inflow: 5,400; Top origin: New York, NY
- Sacramento, CA—Net inflow: 5,400; Top origin: San Francisco, CA
- Cape Coral, FL—Net inflow: 4,900; Top origin: Chicago, IL
- North Port-Sarasota, FL—Net inflow: 4,900; Top origin: Chicago, IL
- Dallas, TX—Net inflow: 4,800; Top origin: Los Angeles, CA
- Houston, TX—Net inflow: 4,300; Top origin: New York, NY
Top ten metros with the biggest outflow of homebuyers in Q1 2023
- San Francisco, CA—Net outflow: 31,100; Top destination: Sacramento, CA
- New York, NY—Net outflow: 23,400; Top destination: Miami, FL
- Los Angeles, CA—Net outflow: 20,300; Top destination: Las Vegas, NV
- Washington, D.C.—Net outflow: 18,000; Top destination: Miami, FL
- Boston, MA—Net outflow: 5,800; Top destination: Miami, FL
- Seattle, WA—Net outflow: 4,700; Top destination: Phoenix, AZ
- Chicago, IL—Net outflow: 4,500; Top destination: Cape Coral, FL
- Denver, CO—Net outflow: 4,200; Top destination: Chicago, IL
- Hartford, CT—Net outflow: 3,200; Top destination: Boston, MA
- Minneapolis, MN—Net outflow: 2,500; Top destination: Chicago, IL
Top takeaways for real estate agents
Depending on your local market, you may be seeing more buyers flowing in or out. In one of the pricey coastal metros, for example, you’ll likely see more homeowners selling their homes to move somewhere more affordable, but you’ll also see more immigrant buyers moving in.
Get familiar with what’s going on in your market with buyers and sellers and what’s working for or against them, so you can educate your clients and prospects and guide them to their best options in today’s market.
