More Homebuyers Looking to Relocate Someplace Cheaper

There are more homebuyers seeking out-of-market—mostly more affordable—places to live, according to a report by real estate brokerage Redfin, based on its customers.

Just about one-third (32.6%) were doing so in the second quarter, slightly above the 32.3% who were doing so in Q1 and approximately 26% were before the pandemic.

“The housing market has slowed following a pandemic-driven buying frenzy, with home sales falling and supply starting to rise due to rising mortgage rates, high home prices, inflation and a faltering economy,” according to Redfin. “Relatively affordable places like Tampa and San Antonio have become more attractive.”

Comes Down to the Monthly Payment

Stuart Denyer, CEO of New Western, tells GlobeSt.com that the average American bases home-buying decisions on the monthly payment, rather than the purchase price of a home. 

“In the space of one year, the 30-year rate has doubled,” Denyer said. “As a result, this monthly expense has risen, and buyers are rethinking their plans. People still want to buy a home, and with remote work here to stay, they’re now able to expand the possibilities of where they live.”

He said the Sunbelt has been a hot spot for some time—from Florida to Texas, Tampa to San Antonio. 

“The Carolinas and Oklahoma are also attracting newcomers with a more affordable lifestyle, especially for those migrating from more expensive North, East and West Coast states,” Denyer said.

Migration from Select Markets

“Most of the net migration outward came from just the New York City; Bay Area; Los Angeles; Washington, D.C.; Boston; and Seattle, according to Freddie Mac,” Greg Phillips, CTO of brokerage firm Houwzer, tells GlobeSt.com.

“The scale of out-migrators was much smaller in every other out-migrating metro,” Phillips said. “These markets were disproportionately dumped by homebuyers seeking affordability. This [Freddie Mac] study further supports a hypothesis of mine that the meteoric rise of the median US home price nationally is driven mostly by relocators driving up previously lower-priced markets rather than continued price growth in higher costs areas.

“This ‘evening out’ of the population from higher population metros to lower population metros has been ongoing since at least 2000 and the magnitude has increased greatly in recent years (after tightening during the great recession), suggesting we are unlikely to see a reversal of this trend, even generationally. It does not seem to be cyclical except in its magnitude.”

Maine Attracting Interested Residents

Bryan Vitale, VP, development at The Procopio Companies, reports seeing a substantial shift from first to second-tier cities in recent months, as affordability remains a challenge across the country. 

“In particular at our Daymark condo property in Portland, Maine, we’re seeing traction from across the nation, with interested buyers in New York, California, and New Jersey expressing a greater interest than buyers in New Hampshire, a neighboring state,” he tells GlobeSt.com.

In fact, according to US Census Bureau data, in 2021, Maine was in the top seven states for net migration, and number one in New England. With the rising mortgage rates and increased affordability challenges, we anticipate buyers will continue to focus on secondary markets, driving demand—and therefore continued development—in those regions.”