COVID caused a ‘Great Reshuffling.’ Soaring costs are behind a new wave

Inman News

With priced-out buyers seeking to relocate this spring, real estate brokers stressed the importance of referral networks as the latest migration wave comes on the heels of an overheated market.

In 2020, Americans fled denser cities in search of more space at home and outdoors. Secondary markets flourished.

In 2021, companies stopped stringing along expected returns to the office, remote-work policies became permanent and the migration dug in its heels.

If those were the first and second waves of the COVID housing market, the third doesn’t have to do with a virus. It’s about high prices and low inventory pushing people to move to new markets all over the country.

“We’re going to see migration for more income levels and more job types in the third wave, as opposed to just the elite tech workers,” said Daryl Fairweather, chief economist at Redfin.

Brokers in popular markets across the country are preparing for a rush of activity this spring while operating among historically low inventory, record-high prices and an expected wave of people moving to new markets across the country.

The anticipated ongoing American reshuffling has made it more important than ever for brokers to put in place referral networks that have them ready for clients to come or go.

“People are really open to getting referred to a great agent in some area they’ve never been to,” said Gary Gold, executive vice president at Hilton & Hyland in Beverly Hills. “You’re really doing them a huge favor. Can you imagine moving someplace and ending up with some dud of a real estate agent in a hot market and just feeling helpless?”

There’s evidence the migration of Americans that started shortly after the onset of the coronavirus pandemic is continuing.

Redfin reported last month that nearly 1 in 3 people are looking to move to a different metro area, the most since the firm started tracking migration data in 2017. People are largely targeting the warm areas in the Sun Belt, led by Miami, Phoenix and Tampa.

What many people are likely to find is a market with scant homes to buy.

“Inventory is 50 percent less than it was a year ago. That’s really almost across the board. Every sector. Every price range,” said Gerry Liguori, a broker/owner at Premier Estate Properties in south Florida. “I’ve been in this business for 30 years. I’ve never seen a market like this.”

The makings of the third wave

Brokers in gateway and secondary markets across the U.S. told Inman they were gearing up for 2022 to be a perpetuation of what started years ago and continued through the pandemic.

After all, they’ve had some practice.

“The great exodus, that started for California three years ago, I don’t think it’s going to reverse,” said Kim Murphy, broker/owner at Murphy and Murphy Southern California Realty.

The exodus Murphy sees involves people selling small, high-priced homes along the coast and buying something much bigger in the Golden State’s more conservative inland regions.

“They can sell their small house in Los Angeles and buy an over 3,000-square-foot house on land, with an office and kind of insulate themselves,” she said.

The median price of homes sold in the U.S. surpassed $400,000 for the first time in late 2021, driven by a mix of millennials buying homes with historically low interest rates and in new markets.

The rapid buying has effectively sped up price appreciation, brokers and others say.

“We’re seeing appreciation which would have taken probably 5 years, it condensed into months,” Liguori said. “We could have never anticipated that much appreciation. Instead of years it was just months. That was just mind-boggling.”

The rapid rise in housing prices has led to the increased interest in relocation. 

“Last year, I think the reason people were moving more than before the pandemic was because of remote work,” Redfin’s Fairweather said. “That’s still happening, but it’s not the pandemic that’s driving it. It’s more affordability and inflation.

“Before the pandemic, Austin was underpriced,” she added. “Now, Austin is losing people to San Antonio.”

The median home list price in Austin has climbed from $430,000 in February 2020 to $595,000 in February 2022, according to — an increase of 38 percent in two years.

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In San Antonio, 80 miles southwest of the Texas capital, home prices have still climbed, albeit at a slower rate, since 2020. Buyers can now buy homes at median prices that are less than half of the median in Austin.

That may be what helped land San Antonio on Redfin’s list of top markets people are considering moving to this year. Its top city of origin for people looking to move? Austin.

“Austin is getting crazy in terms of pricing,” said Dana Philips, a Realtor and associate broker with Phillips & Associates in San Antonio. 

Phillips said she’s seeing people relocating within Texas but also from secondary markets nationally that became the transitory darlings during the first and second waves.

“The places that got hit the hardest, Florida, Arizona and California, their prices were so low and it was great,” Phillips said. “But now they’re rising like they used to. Quite a bit and quickly.”