Based on new data from national property broker Redfin, a record one-quarter (25.4%) of homebuyers nationwide are looking to move to a different metro area. That is up from 23% a year ago and less than 20% before the pandemic.
A record share of homebuyers are relocating because high mortgage rates have made housing more expensive than ever, making relatively affordable areas more attractive.
Phoenix, Las Vegas and Miami--where the typical home is much less expensive than coastal cities like San Francisco and New York--are the most popular metros for homebuyers moving to a different part of the country. That's in spite of those places facing ever-worsening climate risks like heat, drought and flooding.
But that doesn't mean more homebuyers are looking to relocate. In fact, the number of homebuyers moving to a new metro is down 7% from a year ago, the biggest decline on record, as elevated mortgage rates push many Americans out of the homebuying game altogether. Still, out-of-town moves are holding up better than in-town moves: The number of homebuyers looking to move within their current hometown is down a record 18%.
In other words, the overall homebuying pie has shrunk, but buyers moving to a new metro make up the biggest piece of that pie on record.
Out-of-town homebuyers move to Phoenix, Florida despite high risk of drought and flooding
Phoenix is the most popular destination for homebuyers looking to move to a different part of the country, followed by Las Vegas and several Florida metros. Popularity is determined by net inflow, a measure of how many more Redfin.com users looked to move into an area than leave.
Sun Belt metros are popular among relocating homebuyers because many of them are affordable compared to other parts of the U.S. The typical home in Phoenix, for instance, sells for $450,000. That's up significantly from before the pandemic because remote work made the area explode in popularity, but is about half the $800,000 cost of the typical home in Seattle, the most common origin of people moving to Phoenix.
Even though the flow of homebuyers moving into Phoenix has slowed as high mortgage rates have cooled the housing market, it's still attracting more out-of-towners than anywhere else in the U.S. That's in spite of Phoenix facing worsening drought and heat risk. Arizona recently said it will stop issuing homebuilding permits in some parts of the Phoenix desert, partly because migration to the area and extensive development is straining water resources. That will cap the number of new communities in the Phoenix area and could eventually increase the cost of housing.
Most of the other popular destinations for homebuyers also face extreme climate risks; for instance, parts of the Sacramento area face high wildfire danger and many Florida metros are very susceptible to flooding. Some insurance companies have even stopped providing coverage to homeowners in California and Florida due to high risk of damage by natural disasters.
"Climate risks haven't yet stopped many homebuyers from moving into areas that don't have enough water, like Phoenix, and places that could eventually be underwater, like coastal Florida," said Redfin Chief Economist Daryl Fairweather. "That's because even though Sun Belt home prices soared during the pandemic, those metros remain a bargain for people relocating from expensive coastal cities. Arizona's recent limit on new construction isn't likely to deplete inventory enough--or push prices up enough--to change that calculus much in the short term."
Buyers are leaving Washington, D.C. and Boston for small beach towns
More homebuyers are looking to move away from San Francisco, New York and Los Angeles 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.
Even before the remote-work boom that allowed scores of people to move away from expensive coastal job hubs, a lot of homebuyers left these areas in favor of more affordable housing markets. The most popular destinations are less expensive, sunny parts of the country such as Las Vegas and Miami.
But notably, smaller vacation hotspots now top the list of most popular destinations for people leaving two pricey coastal hubs: Washington, D.C. and Boston. Homebuyers leaving Boston are most commonly going to Portland, ME, a popular summer tourist spot. And buyers moving away from the nation's capital are most commonly moving to the Salisbury, MD metro area, home to popular beach towns like Bethany Beach, DE and Ocean City, MD.
Those places are popular with homebuyers--especially remote workers--not just because of their vacation vibes, but because of their relative affordability. The typical Salisbury home, for instance, sells for $245,000, compared with $560,000 in Washington, D.C.