According to a new report from Redfin, the technology-based real estate brokerage, the number of home searchers looking to relocate to a new metro fell 3.6% year over year in February.
That compares with a 14.4% drop in Redfin.com home searchers looking to relocate within their current metro. Those are both the most significant declines in Redfin’s records, which go back through 2018.
The rise in mortgage rates over the last year has made purchasing a home more expensive almost across the board. Still, elevated rates often aren’t as big of a deterrent for relocating homebuyers because they’re typically moving to more affordable areas.
For instance, someone moving from Los Angeles to Las Vegas could buy a home comparable to the one they’re selling in Los Angeles for half the price. High rates don’t impact that buyer as much because they’re getting a cheaper house and may use proceeds from a home sale in a more expensive area. People moving from one part of the country to another may also do so for a higher-paying job, which would help offset high mortgage rates.
Additionally, homebuyers relocating to a different part of the country may have a non-negotiable reason for their move: Maybe they are moving for that higher-paying job, or to be closer to family. High rates are less likely to deter those homebuyers than ones simply considering a different house within the same town.
One-quarter (25.1%) of house hunters nationwide looked to relocate to a new metro in February, a record high. That’s up from 22.9% a year earlier and roughly 18% before the pandemic.
Relocators made up more homebuyers than ever because elevated mortgage rates, still-high home prices, inflation, and economic uncertainty motivate the few people still buying homes to move to more affordable areas. Remote work has also made it more feasible for Americans to relocate.
Miami, Phoenix, Las Vegas, Sacramento, CA, and Tampa, FL, were the most popular destinations for house hunters looking to move to a different metro in February. Other parts of Florida and some Texas metros round out the top 10: Orlando, Cape Coral, Dallas, North Port-Sarasota, and Houston. Net inflow determines popularity, a measure of how many more Redfin.com users looked to move into an area than leave.
Relatively affordable Sun Belt metros perennially top the list of places people are looking to move, due mainly to their comparatively cheap housing and warm weather. While homes in these places cost considerably more than pre-pandemic, they remain comparatively affordable. The typical home in most popular destinations is less expensive than the home in the top origins. The typical Miami home sold for $485,000 in February, compared with $640,000 in New York, the most common origin for homebuyers looking to move in. And the typical Phoenix home sold for $425,000, compared with $710,000 in Seattle, the most common origin.
Homebuyers looked to leave San Francisco, New York, and Los Angeles more than any other metro in February, followed by Washington, D.C., and Chicago. This ranking is determined by net outflow, measuring how many more Redfin.com users looked to leave a metro than move in. While San Francisco tops the list of places people want to leave, fewer homebuyers are leaving than a year ago. That may be partly because Bay Area home prices are falling. Expensive coastal job centers typically top the list of places people are leaving. That trend became more pronounced recently as remote work allowed homebuyers to relocate to more affordable areas.