Homebuyers Looking to Relocate as Prices Skyrocket

Nearly one-third (32.3%) of real estate brokerage Redfin users looked to relocate in January and February, according to a new report.

That’s up from 31.5% in the first quarter of 2021 and up significantly from 26% in 2019, before the pandemic began.

Homebuyers are relocating at a record rate largely because remote work is allowing many Americans the freedom to live in relatively affordable areas, with metros such as Miami and Phoenix topping the list of destinations. 

The trend is similar for renters. Google’s Sam Noyd, Senior Business Lead, Home & Consumer Services, during a recent Apartments.com webinar, said an estimated 24 percent of renters plan to move. In those cases, the primary reasons/emotional triggers were “mental health” and “refresh” at 50 percent; are top emotional triggers; “safety” 40 percent; and “making new memories” at 37 percent.

The functional triggers included: “have more indoor space for work” 41 percent; “cost of living” at 30 percent; “have more outdoor space” at 29 percent; “have outdoor space” because they currently have none at 22 percent; and “taking a new job” at 19 percent.

Homebuyers Priced Out of the Market

With US home prices up 16% year over year in February and mortgage rates jumping from last year’s record lows, many homebuyers are priced out of their local markets. One of the only options is relocating to a more affordable area, particularly for first-time buyers who aren’t able to use proceeds from selling one home to buy another.

Phoenix Redfin agent Heather Mahmood-Corley noted that Phoenix is a hotspot for out-of-town homebuyers as some of them are relocating permanently, some are buying vacation homes and some are investors who turn the homes into rentals.

“I recently worked with a young couple that’s turning their Seattle condo into a rental and moving to Phoenix because they can work remotely and afford a single-family home here,” she said in prepared remarks.

“As for the investors, it’s not just corporations coming to Phoenix—it’s individuals, too. They realize they can buy three rental properties here for the price of one in San Francisco. It’s a side hustle for some and a retirement plan for others.”

Buyers Flocking to Miami, Phoenix, Tampa

Miami was the most popular destination for homebuyers looking to relocate in January and February, unchanged from the second half of 2021. That’s measured by net inflow, or how many more Redfin users looked to move into an area than leave.

Next came Phoenix, Tampa, Sacramento and Las Vegas. Sunny, relatively affordable metro areas perennially top the list of places homebuyers are looking to move. The trend has grown even stronger over the last year as remote work has become permanent for many Americans. Net inflow increased from last year in four of the top five destinations (Las Vegas is the exception).

“With out-of-towners driving up home prices in Phoenix, a lot of local first-time buyers have bowed out of the market,” Mahmood-Corley said. “They just don’t have the cash to compete, especially when there’s such limited inventory. Oftentimes, the only homes that are both available and affordable are too far out of town for them.” Buyers are moving away from coastal California and New York

More homebuyers looked to leave San Francisco than any other metro in January and February. That’s measured by net outflow, or how many more Redfin.com users looked to leave an area than move in.

Next came Los Angeles, New York, Washington, D.C., and Seattle. Expensive coastal metros typically top the list of metros homebuyers are looking to leave, a trend that has grown stronger with the pandemic. Significantly more Redfin.com users looked to leave San Francisco, Los Angeles, Washington, D.C., and Seattle in January and February than a year earlier.