A record one-quarter (25.4%) of homebuyers nationwide are looking to move to a different metro area, according to a new report from Redfin, the technology-powered real estate brokerage. That is up from 23% a year ago and less than 20% before the pandemic. And Phoenix is the top relocation destination for those looking to move.
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.
Relocation destination hot spots
Out-of-town homebuyers move to Phoenix, Florida despite high risk of drought and flooding
Phoenix is the most popular relocation 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.”
About Real Estate Intelligent Marketing (REIM):
REI Marketing is an innovative Real Estate Marketing Company that offers distinctive real estate services to developers and multifamily investors. We are a vibrant, dedicated team of industry professionals with international experience in marketing and multifamily investment.