The Pandemic-Driven Migration Boom Is Waning, With the Share of Homebuyers Relocating at Lowest Level in 18 Months

Rhea-AI Summary

Redfin (NASDAQ: RDFN) reports a decline in the share of U.S. homebuyers looking to move to a different metro area for the third straight month in November, dropping to 23.9%, the lowest share in a year and a half. The decline is attributed to the decreased feasibility of remote work and the overall slowdown in homebuying due to record-high unaffordability and severe supply shortage.

Insights

Market Research Analyst

As the dynamics of the real estate market shift, it's crucial to analyze the underlying factors influencing homebuyer behavior. The recent decline in the share of U.S. homebuyers looking to move to different metro areas can be attributed to a combination of factors. Firstly, the affordability crisis, marked by record-high housing prices and a supply shortage, has likely deterred potential movers. Secondly, the normalization of workplace policies, with employers recalling staff to offices, reduces the feasibility of remote work, thus impacting migration patterns.

From a market perspective, this decline may signal a cooling off in the previously hot migration markets, potentially stabilizing prices in those areas over time. Conversely, expensive coastal metros might see a relative increase in demand, as the migration outflow diminishes. Additionally, this trend could impact local economies, as the influx of new residents often brings additional spending and tax revenue.

For real estate companies and investors, these shifts necessitate a strategic reassessment. There could be a pivot towards marketing properties in metros with returning demand and a reevaluation of investment portfolios to align with the changing market sentiment.

Financial Analyst

The minute decline in the share of homebuyers seeking relocation is a nuanced but telling indicator of market sentiment and economic conditions. While the overall percentage change is small, it is the first annual decline in Redfin's records, which could suggest the beginning of a trend. The real estate sector's performance, particularly companies like Redfin, is sensitive to such shifts in consumer behavior.

Financially, the reduced interstate mobility could affect Redfin's revenue streams, as cross-metro transactions might carry different commission structures or volumes compared to local sales. Moreover, this could also reflect on the broader housing market indices and potentially influence real estate investment trusts (REITs) and housing market-related securities. Investors would do well to monitor these trends for indications of market saturation or recovery in various geographies.

Long-term implications might include a recalibration of housing market forecasts and the potential for increased inventory in markets where out-migration is slowing. This could eventually lead to price adjustments and affect the profitability of real estate transactions.

Economist

The subtle shift in migration patterns among homebuyers has broader economic implications. A reduction in interstate movement could signify a stabilization of the workforce, with fewer individuals seeking economic opportunities elsewhere. This stabilization may, in turn, affect regional labor markets, potentially easing wage inflation pressures in high-demand areas.

Additionally, the housing affordability crisis, highlighted as a contributing factor to the slowdown in homebuying, reflects broader inflationary trends and monetary policy impacts. The Federal Reserve's interest rate hikes to combat inflation have increased mortgage rates, thus affecting housing affordability and mobility. The interplay between housing trends and monetary policy is a critical aspect for stakeholders to consider when forecasting economic health and consumer spending power.

Understanding the correlation between housing market trends and macroeconomic indicators is essential for anticipating future economic conditions. Stakeholders should remain vigilant about how these shifts may signal changes in consumer confidence and spending, which are key drivers of economic growth.

Redfin reports the share of homebuyers moving to a different metro area is coming down from a peak as it becomes less feasible to work remotely

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The share of U.S. homebuyers looking to move to a different metro area declined for the third straight month in November, dropping to 23.9%. That’s the lowest share in a year and a half, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. It’s down from 24.1% a year earlier–a tiny drop, but the first annual decline in Redfin’s records–and down from a record high of 26% over the summer.

Overall homebuying slowed in 2023 because it was the least affordable year on record and there was a severe supply shortage. There were 4% fewer Redfin.com users looking to move to a new metro in November than a year ago, compared with a 3% year-over-year drop for Redfin.com users searching within their home metro. The slightly bigger drop for house hunters looking to relocate explains why migrants are making up a smaller share of overall home searchers.

The portion of house hunters who are relocating to a new area is coming down for a few reasons. One, there’s less flexibility to work remotely as employers call workers back to the office. That means the flow of homebuyers moving from the Bay Area to Austin, TX or Boise, ID, for example, has slowed. Two, home prices generally increased more in popular migration destinations than they did in expensive coastal metros during the pandemic, making the case for moving a bit less compelling. For example, prices in Sacramento–the most popular destination this month–are up about 35% since before the pandemic, compared with an 8% increase in the Bay Area.

Still, the migration rate remains above pre-pandemic levels of around 19% as some Americans are still chasing affordability. All 10 of the most popular migration destinations have lower prices than the most common origin of buyers moving in.

Spokane, WA lands on list of popular destinations for the first time

Spokane has made it onto Redfin’s list of popular migration destinations for the first time on record, landing at number 10. Popularity is determined by net inflow, a measure of how many more Redfin.com users looked to move into an area than leave.

The number-one origin of homebuyers moving to Spokane, the second most populous city in Washington, is Seattle, followed by Los Angeles and Portland, OR. Spokane has comparatively low housing costs: The typical Spokane home sells for $416,000, compared to $775,000 in Seattle.

Top 10 Metros Homebuyers Are Moving Into, by Net Inflow Net inflow = Number of Redfin.com home searchers looking to move into a metro area, minus the number of searchers looking to leave
Metro*	Net Inflow, Nov. 2023	Net Inflow, Nov. 2022	Top Origin	Top Out-of-State Origin
Sacramento, CA	5,100	7,000	San Francisco, CA	New York, NY
Las Vegas, NV	3,800	6,400	Los Angeles, CA	Los Angeles, CA
North Port-Sarasota, FL	3,700	3,700	New York, NY	New York, NY
Cape Coral, FL	3,700	4,000	Miami, FL	Chicago, IL
Salisbury, MD	3,600	2,000	Washington, D.C.	Washington, D.C.
Myrtle Beach, SC	3,600	2,800	Washington, D.C.	Washington, D.C.
Orlando, FL	3,500	3,300	New York, NY	New York, NY
Portland, ME	3,400	2,800	Boston, MA	Boston, MA
Nashville, TN	3,000	2,800	Los Angeles, CA	Los Angeles, CA
Spokane, WA	2,500	2,300	Seattle, WA	Los Angeles, CA
*Combined statistical areas with at least 500 users searching to and from the region in Sept. 2023-Nov. 2023

Los Angeles tops list of metros homebuyers are leaving for first time

More homebuyers are leaving Los Angeles than any other metro area in the country. That marks the first time on record it has been the number-one place homebuyers are leaving and the first time in over two years the Bay Area has dropped out of the number-one spot. The Bay Area comes in second, followed by New York. That’s based on net outflow, a measure of how many more Redfin.com users are looking to leave a metro than move in.

Migration out of both Los Angeles and the Bay Area has slowed since the height of the pandemic, when remote workers were fleeing both California metros in favor of more affordable places. But Los Angeles has surpassed the Bay Area because the flow out of the Bay Area has steadily slowed, while the flow out of Los Angeles has picked back up in recent months.

Top 10 Metros Homebuyers Are Leaving, by Net Outflow Net outflow = Number of Redfin.com home searchers looking to leave a metro area, minus the number of searchers looking to move in
Metro*	Net Outflow, Nov. 2023	Net Outflow, Nov. 2022	Top Destination	Top Out-of-State Destination
Los Angeles, CA	26,100	30,300	Las Vegas, NV	Las Vegas, NV
San Francisco, CA	25,400	32,000	Sacramento, CA	Seattle, WA
New York, NY	24,900	20,700	Miami, FL	Miami, FL
Washington, D.C.	13,300	16,100	Salisbury, MD	Salisbury, MD
Seattle, WA	11,900	1,300	Spokane, WA	Phoenix, AZ
Chicago, IL	7,600	7,100	Cape Coral, FL	Cape Coral, FL
Boston, MA	5,000	6,100	Portland, ME	Portland, ME
Philadelphia, PA	3,000	1,300	Salisbury, MD	Salisbury, MD
Detroit, MI	2,100	3,400	Washington, D.C.	Washington, D.C.
Denver, CO	2,000	3,200	Chicago, IL	Chicago, IL
*Combined statistical areas with at least 500 users searching to and from the region in Sept. 2023-Nov. 2023

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-migration-trends-November-2023

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can 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. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 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/20231229882214/en/

Redfin Journalist Services:

Ally Braun

206-588-6863

press@redfin.com

Source: Redfin

FAQ

What is the share of U.S. homebuyers looking to move to a different metro area?

The share of U.S. homebuyers looking to move to a different metro area declined to 23.9% in November, the lowest in a year and a half.

What caused the decline in the share of homebuyers moving to a different metro area?

The decline is attributed to the decreased feasibility of remote work, record-high unaffordability, and a severe supply shortage.

What are the reasons for the decline in the share of homebuyers moving to a different metro area?

The decline is due to decreased remote work flexibility and increased home prices in popular migration destinations, making relocation less compelling.