Newcomers to Philadelphia Have Nearly 40% More to Spend on Homes Than Locals

Rhea-AI Summary

The latest analysis from Redfin reveals significant differences in homebuying budgets between out-of-towners and local buyers in the U.S. In Philadelphia, out-of-towners average $588,000 for a home, 39% more than local buyers at $422,000. New York follows with a $1.3 million average for out-of-towners. Notably, Philadelphia's home prices remain below New York’s, with a median sale price of $300,000. Despite a slowing housing market, demand persists from affluent buyers relocating for remote work opportunities. The analysis covers 23 cities, with higher budgets noted in 19 cities.

Positive

• Out-of-towners show significantly higher homebuying budgets, indicating a strong demand for homes in affordable cities.
• Philadelphia's lower median home price of $300,000 presents a lucrative opportunity compared to pricier markets like New York.

Negative

• Local buyers face increased challenges due to rising home prices and mortgage rates.
• The housing market slowdown could indicate a longer-term trend that may affect future sales.

Out-of-towners have bigger budgets than locals in relatively affordable destinations like Philadelphia, Atlanta and Dallas because many are remote workers moving in from more expensive places

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The average out-of-towner moving to Philadelphia in the first half of 2022 had $588,000 to spend on a home, 39% higher than the $422,000 average budget for local buyers, according to a new analysis from Redfin (www.redfin.com), the technology-powered real estate brokerage. That's the biggest gap among the cities included in the analysis, which is based on the average maximum list-price filters for homes set by Redfin.com users in their saved searches.

New York comes next, with an average out-of-town budget of $1.3 million, 31% higher than the average local budget. It’s followed by Atlanta (30% higher), Dallas (22% higher) and Portland, OR (18% higher). Out-of-towners had higher budgets in 19 of the 23 cities in this analysis.

Newcomers to Philadelphia have significantly higher budgets because they typically come from coastal job centers with high salaries and cash on hand from selling a high-value home. Philadelphia’s popularity with affluent out-of-town homebuyers shot up at the beginning of the pandemic as remote work made it feasible to move to a more affordable area while keeping a high hometown salary. New York is by far the most common origin for out-of-towners moving to Philadelphia, and it also attracts a lot of migrants from Washington, D.C. and Los Angeles.

The typical Philadelphia home sold for just $300,000 in June, less than half of New York’s $705,000 median sale price. Prices in Philadelphia have also grown slower: They’re up 20% from the beginning of the pandemic, compared with a 26% jump in New York and a 38% nationwide bump.

“Even though the housing market has slowed, the share of homebuyers moving to different parts of the country has not,” said Redfin Deputy Chief Economist Taylor Marr. “That’s partly because home prices and mortgage rates have increased so much that homebuyers with the flexibility to relocate are seeking out affordable areas. Someone moving from Los Angeles to Philadelphia may have a higher monthly housing payment than they would have six months ago, but it’s still much lower than it would be in coastal California.”

“The market looks different for locals, many of whom are priced out or driven to search in the suburbs because both home prices and mortgage payments have risen significantly in the last year,” Marr continued. “But local buyers may get a break as the market cools and competition slows.”

Atlanta and Dallas are also popular pandemic-fueled migration destinations. Dallas was the 10th most popular destination in the second quarter, and Atlanta came in at number 12.

Affluent New Yorkers are moving back to the city with big budgets

The story is different in New York, one of the priciest metro areas in the country. One reason why house hunters in New York have bigger budgets than locals: Many of those out-of-towners actually are locals–and they’re wealthy locals.

“A lot of the people who can afford to buy homes in New York right now are those moving back to the city after a pandemic hiatus, and they likely have more money than the locals who stayed put,” said Masha Berman, a Redfin agent in New York. “I’m also seeing a lot of out-of-town investors and affluent pied-a-terre buyers.”

Locals have bigger budgets in the Bay Area

Locals had higher budgets than out-of-towners in four of the 23 cities, all of them in California and three in the Bay Area.

The average budget for locals in Fremont, CA (located in the East Bay) was about $1.9 million, 20% higher than the average migrant budget and the biggest gap among the cities in this analysis. Next comes San Francisco, where the average local budget was about $2.1 million, 12% higher than the average migrant budget. It’s followed by San Jose (4% higher) and Irvine (3% higher).

To read the full report, including methodology and additional metro-level data, visit: https://www.redfin.com/news/migrant-local-homebuying-budget-2022/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005321/en/

Redfin Journalist Services:

Erin Osgood, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What is the average homebuying budget for out-of-towners in Philadelphia according to the latest Redfin analysis?

The average budget for out-of-towners moving to Philadelphia is $588,000.

How does the homebuying budget of locals in Philadelphia compare to out-of-towners?

Local buyers in Philadelphia have an average budget of $422,000, which is 39% lower than out-of-towners.

Which city has the highest average out-of-town homebuying budget?

New York has the highest out-of-town average budget at $1.3 million.

What impact has remote work had on homebuying trends in affordable cities?

Remote work has increased interest in affordable cities, leading to higher budgets from out-of-towners.

How have Philadelphia's home prices changed compared to New York's since the pandemic?

Philadelphia's home prices have increased 20% since the pandemic, while New York's prices have risen 26%.