With mortgage rates soaring, the share of Redfin.com users who were looking to move to a different metro area in the third quarter rose to 24.2% — a new record high.
This figure is up from 23.3% in second-quarter 2022, 21.6% in third-quarter 2021 and 18% in pre-pandemic days. The heightened interest rate environment has left prospective homebuyers who remain in the purchase pool reprioritizing affordability, which in many cases has meant finding a different, less pricey place to call home.
“With a recession looming and household expenses high, many people can’t afford to buy a home in an expensive area and/or want to save money in case of an emergency, which makes relocating somewhere more affordable an attractive option,” said Chen Zhao, Redfin’s economics research lead.
That motivation has kept alive the trend of buyers looking to leave expensive coastal gateways, with these cities taking up the top five spots in Redfin’s ranking of cities with the most net outflow (local users searching for homes elsewhere minus the number of non-locals searching for homes within the metro).
San Francisco took the dubious distinction atop the list with 37,800 residents (24% of Redfin users in the metro area) looking for homes in a different locale. Los Angeles (33,600; 20%); New York (23,600; 27%); Washington, D.C. (18,900; 18%) and Boston (9,300; 19%) rounded out the top five, while noncoastal gateway Chicago (5,700; 16%) was in sixth place.
Metros near these cities that have more affordable homes (relative to coastal gateway prices, at least) crowded the top of the list for net inflow, or the difference between the number of home seekers looking to move in compared to those looking to leave. Sacramento, for example, had a net inflow of 8,700, highest in the country. Miami (8,000), Las Vegas (7,000), San Diego (6,800) and Tampa (6,700) made up the rest of the top five.
“More than half of my buyers in Sacramento are from outside the area,” Redfin agent Samantha Rahman said. “They’re mostly remote workers coming from the Bay Area who may need to commute to the office a few times a month but are saving significantly on housing costs.
“It makes even more sense to relocate to a more affordable region now than it did when mortgage rates were low, as lower-priced homes offset some of the expense of high rates and rack up less interest.”