Search data from Redfin suggests a major shift in where and why people buy homes brought on by the pandemic and rising homebuying costs.
Facing rising home prices and mortgage rates, homebuyers are searching Redfin for homes outside of their home metros at a record rate.
According to an analysis of over two million Redfin users, more than 32% of homebuyers were searching outside of their current metro area in January and February 2022. That’s up from 31.5% during the same time last year and 26% in the first quarter of 2020, when the pandemic began.
There are two likely drivers of this new homebuying trend:
- Remote work is allowing more homebuyers to move further away from their place of work
- Uneven price growth is making some markets much more affordable than others
This is evident by the parallel growth between home prices and out of metro searches that began at the onset of the pandemic. Both were relatively stable leading up to the pandemic before beginning a rapid ascent in the second quarter of 2020.
By the first months of 2022, both relocation searches and home prices are in record territory.
A major shift in homebuying habits
This trend may be part of a larger paradigm shift in how people buy homes.
In each year since 2015, the top reason for moving has been a new job or job transfer, according to moving data from United Van Lines. But that share has dropped from 60.1% of moves in 2015 to 32.5% of moves in 2021.
Meanwhile, cost of living didn’t even register as a reason to move from 2015-2019, and has since grown to the primary reason for 6.7% of moves in 2021. It even overtook health… during a global pandemic.
As shown by the graph above, it’s no coincidence that cost of living became a substantial reason to move in 2020, because that’s when home prices started their rapid ascent.
Based on Redfin’s relocation data and the near 20% price gains in the early part of 2022, it’s safe to assume cost of living will continue to increase its share as a reason for moving. This signals a pretty major shift in how and why people buy homes.
Instead of buying a home because they had to move, people are moving so they can buy a home.
Affordability is the main attraction in 2022
In the past, people typically moved to where work brought them. But remote work opportunities and eroding affordability due to rising mortgage rates and home prices have made cost of living a priority.
That’s evident by the home prices of the top metros for inflow and outflow migration in 2022.
Top metros for inflow migration in 2022
MetroNet inflow Jan/Feb 2022Median sales price (Feb 2022)Top out-of-state originMedian sales price of top origin (Feb 2022)Miami+13,835$450KNew York City$670KPhoenix+12,501$456KLos Angeles$837KTampa, Fla+9,052$351KWashington, D.C.$495KSacramento, Cali.+7,936$575KSeattle$751KLas Vegas+7,911$423KLos Angeles$837KCape Coral, Fla.+6,620$365KChicago$295KNorth Port, Fla.+5,970$425KChicago$295KDallas+5,429$400KLos Angeles$837KSan Antonio+5,373$308KLos Angeles$837KAtlanta+4,820$355KNew York City$670K
In almost every case the median home sales price in the destination is much lower than the origin. The two exceptions are the retirement destinations of Cape Coral and North Port, Fla. that are slightly more expensive (relatively speaking) than Chicago.
Even with these two outliers, the median home sales price is on average $241,600 lower in the destination metros than the origin metros.
If employment were still the main reason for moving, the destination metro would likely be more expensive as people move to large metro areas for high-paying jobs.
But the fact that the destination home prices are substantially lower suggests that affordability has become a dominant driver of relocation – which is a major shift from just two years ago.
Related reading: 10 Most Affordable Markets to Buy a New Home