Residential Real Estate News
Austin is Now Losing Homebuyers to Other U.S. Cities
First time since 2017 says Redfin
Based on new data from national property broker Redfin, more homebuyers looked to leave Austin Texas than move in during the third quarter of 2023. That's the first time on record there hasn't been a net inflow into the Texas capital. Redfin's records go back through 2017.
The number of Austin-based users looking for homes outside the metro area has more than doubled over the last year.
This marks a stark reversal for Austin, which was a magnet for out-of-town homebuyers looking for a more affordable place to live even before the pandemic. Once the pandemic began, ushering in an era of remote work and record-low mortgage rates, Austin's popularity boomed: It was the number-one U.S. migration destination in the beginning of 2021.
Austin has fallen out of favor with relocating homebuyers for several reasons:
- Rising home prices. By mid-2022, when Austin home prices peaked, prices were up more than 75% from before the pandemic. Austin prices have since declined from that peak, but homes are still much more expensive than before the pandemic. The gap between Austin's home prices and those of where homebuyers commonly move from, like Los Angeles and San Francisco, is smaller than it used to be.
- Monthly mortgage payments have doubled since before the pandemic. Soaring mortgage rates exacerbated Austin's affordability problems, making monthly housing payments even more expensive than they already were with increasing prices. Today's typical monthly payment for Austin's median-priced home ($455,000) at this week's average mortgage rate (7.63%) is $3,890, nearly double 2019's typical payment of $2,136 (median sale price of $320,000; average mortgage rate of 3.94%).
- Some homebuyers who moved to Austin are leaving. Austin Redfin agents report that some formerly remote workers moved back to their home city after being called back to the office, and a few others are moving back after trying Austin and realizing it's not a long-term fit. Some others are likely leaving Austin to be closer to major job hubs as the labor market starts slowing.
Slowing migration is good news for Austin locals looking to buy. Austin's median home price is down about 5% year over year, the biggest decline in the U.S., and it's down nearly 20% from its pandemic peak. "I'm telling buyers that this is the first time in years they can get a deal on a house, even with high mortgage rates," said Austin Redfin Premier agent Carmen Gioia. "It's probably a better time to buy down than waiting for mortgage rates to drop, because once that happens, competition will escalate and prices will shoot up. Right now, buyers are able to take their sweet time, negotiate with sellers, and buy a home without getting into a wild bidding war."
Homebuyers leaving Austin are most commonly moving to other places in Texas. San Antonio and Corpus Christi are two of the three most popular destinations for Redfin.com users moving away from Austin; the other is Denver.
Share of U.S. homebuyers moving to a different part of the country is near record high
Nationwide, the share of homebuyers relocating to a different metro area is still near record highs. Roughly one-quarter (25.9%) of homebuyers looked to move to a different part of the country in the third quarter. That's essentially flat from the record high of 26% hit in August, and up from 24% a year ago and about 19% before the pandemic began.
There are 9% fewer Redfin.com users looking to move away from their home metro than a year ago-the biggest annual drop on record. But out-of-town home searches are holding up better than in-town searches: There are 17% fewer Redfin.com users searching within their home metro than a year ago.
Homebuyers are moving into relatively affordable but climate-risky places
Sacramento, CA, Las Vegas and Orlando, FL were the most popular destinations for relocating homebuyers in the third quarter. Popularity is determined by net inflow, a measure of how many more Redfin.com users looked to move into an area than leave.
Half of the 10 most popular destinations are in Florida, and 8 of the 10 are on the East Coast-although the two most popular are in the western part of the U.S. Nearly all of the places homebuyers are moving to are more affordable than the places people are coming from, which helps explain why they're so popular even though most face increasing climate risks. Sacramento, for instance, faces severe heat risk, and Orlando faces extreme wind/hurricane risk.
Homebuyers are leaving San Francisco, New York and Los Angeles for more affordable places
Homebuyers are leaving San Francisco, New York and Los Angeles more than any other metro in the country. That's based on net outflow, a measure of how many more Redfin.com users are looking to leave a metro than move in.
Expensive coastal job centers typically top the list of metros homebuyers are leaving, mainly because homebuyers are seeking more affordable places to live. The median sale price in San Francisco, for instance, is more than double that of Sacramento, the most common destination for homebuyers leaving the Bay Area.
