A recent report by Redfin found that nearly one-third (32.3%) of its users considered relocation while searching for a home in January and February 2022. This is a notable increase from the pre-pandemic rate of 26.3% of potential buyers looking to relocate when beginning their home buying process.
The onset of the pandemic saw an increase in demand for homeownership, with people spending more time in the home. This trend has continued through the last two years, further excelled by historically low mortgage rates and the increased adoption of remote work. This shift allows workers to search beyond the traditional metropolitan hubs to find employment, moving to new areas with lower living costs or a better fit for their lifestyle.
Moving Away from Large, Expensive Cities
The Redfin report also highlights the top metro areas that homebuyers were looking to leave in January 2022 remained unchanged from the fourth quarter of 2021. San Francisco, Los Angeles, New York, Seattle, and Washington, D.C. led the list of net outflows from these areas, basing this measure on the homebuyers seeking to move out of those areas versus moving in.
The commonality among these cities is that they are expensive for homeowners. San Francisco tops the list, with a median sale price of nearly $1.4 million, making it the most expensive city to buy a home. The rest of the metro areas listed prior are not far behind.
Finding Homes in New Markets
The leading destination for relocating homebuyers was Miami, a trend seen in the second half of 2021 and continuing into the beginning of 2022. Cities close behind Miami include Phoenix, Tampa, Sacramento, and Las Vegas, similar metro areas that boast warm weather and relatively lower cost of living.
The median home sale in Miami was around $440,000 in January 2022, which is an 18% increase year over year, though more affordable than many other metro areas that others are fleeing, such as San Francisco or New York. As more and more of these relocate to the “Sun Belt” metro areas, the price of homes and the cost of living are predicted to increase.
Reasons for Relocation
Remote work became a necessity for many throughout the pandemic, and it appears this shift may be here to stay for some employers. Currently, 58.6% of the total U.S. workforce are remote workers. Some see this as a temporary response to the current state of the world, but others feel that remote work will continue to remain commonplace.
The rise of remote work means remote workers may no longer need to live near their place of employment, often located in expensive metro areas. Homeownership is desirable for these workers, offering more space for a home office and greater privacy. Working from anywhere provides homeowners with better flexibility to relocate to areas with a lower cost of living.
Priced Out of Local Market
Home prices in most markets have been rising over the past two years and show no signs are lowering soon, despite mortgage rates continuing to climb. With many homes selling well over their listing price and buyers getting caught in bidding wars, many homebuyers have difficulty finding available homes in their market that fit into their budget. Being priced out may lead these buyers to find other markets with lower prices to maximize their buying power than their local markets.
Relocation has always played a part for homebuyers looking to move into new areas due to work transfers or other life circumstances, but not to the level seen in today’s market. As more Millennials reach the stage of their lives for homeownership, finding affordable homes may continue to cause, homebuyers to seek out affordable areas and lead to ongoing relocation.