Changes in Homebuyer Migration Trends
The real estate market in the United States is experiencing a split trend, with home prices falling on the West Coast but surging on the East Coast. Recent data from Redfin.com shows that homebuyers are increasingly looking for homes in affordable metros after the surge in mortgage rates and the ongoing housing affordability crisis pushed many people to reevaluate their living situation.
Redfin’s migration analysis is based on two million users who viewed for-sale homes online across more than 100 metro areas from December 2022 to February 2023. The data suggests that fewer homebuyers within their metro area are looking to move while searches for out-of-town movers have only slightly declined.
US Housing Market Experiences Divergent Trends Depending on Location
In January 2023, home prices fell by 7.5% in Seattle and 10.3% in San Francisco, while they surged 12% in Miami and 9.3% in Orlando, as well as increased 8.3% in Buffalo, NY. Except for Austin, Texas, all of the 37 biggest metro areas east of Colorado saw home prices rise year-over-year in January. All 12 major housing markets west of Texas saw home prices fall over the same time period.
The split in the US housing market is unprecedented and is driven by factors such as a wave of high-profile technology company layoffs that have mostly targeted West Coast cities. Additionally, West Coast home prices had room to fall after dizzying gains over the past decade, while housing markets with a supply of relatively affordable homes have seen steady price gains.
Millennials and Gen Z prospective buyers may prevent significant price declines despite elevated mortgage rates. One of the factors behind this trend is that relocating homebuyers may have non-negotiable reasons for their move, such as a higher-paying job or being closer to family, making high rates less likely to deter them.
Homebuyers’ Interest in Relocating to New Metro Areas Amid Rising Mortgage Rates
Rising mortgage rates have dented buyer demand in general, but it’s had little impact on where buyers wish to move. The majority of homebuyers looking to relocate showed interest in Florida and other Sun Belt states.
Relocating homebuyers from high-cost metros can compensate for higher interest rates by buying a home in less costly metro areas like Florida. This trend is due in part to the fact that the typical home in popular “go-to” destinations is less expensive than the typical home buyers leave behind.
One in four nationwide buyers looked to relocate to a new metro in February, compared with 22.9% YoY earlier and about 18% before the pandemic. The top five state-to-state movers’ destinations are all located in Florida. The most common origin for incoming homebuyers in Miami is New York, where the typical home sold for $640,000 compared with $485,000 in Miami.
Top Metros That Homebuyers Looked to Leave in February
The top metros that homebuyers looked to leave in February were San Francisco, New York, and Los Angeles, followed by Washington D.C. and Chicago.
The shifting trends among homebuyer migration highlight the changing needs and priorities of people who are seeking affordable living opportunities amid rising mortgage rates. Although housing prices have continued to fluctuate across the country, Redfin.com’s data suggests that the demand for more affordable living opportunities remains high.
Image Source: Wikimedia Commons
