Homebuyers looking to relocate due to affordability, Redfin says – here’s where they moved to

Miami was the top destination for homebuyers looking for a cheaper place to live, according to a Redfin report. (one)

Homebuyers looking for cheaper cities are relocating in record numbers, according to a recent report.

According to the company’s migration report, a record-breaking 33.9% of Redfin users considered moving to another metro in July and August. That’s up 32.6% in the second quarter of this year and the highest since migration began being tracked in 2017.

Most of this relocation activity was driven by homebuyers living in coastal areas with expensive employment services who wanted to move somewhere cheaper.

“Mortgage rates of 6 percent are compounding already high home prices and motivating homebuyers — especially long-distance workers — to turn expensive neighborhoods into cheaper ones,” said Taylor Marr, Redfin’s deputy chief economist. “Persistent inflation and collapsing inventories are also eating into buyers’ budgets, making relatively affordable areas even more attractive.”

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Homebuyers are attracted to more affordable locations in Sun Belt

Homebuyers are trading expensive coastal areas for more affordable warm-weather locations in the Sun Belt, the report said. The average selling price in 8 of the top 10 most popular relocation destinations is under $500,000, and 6 of those locations have no state income tax, lowering the overall cost of living.

San Francisco saw the largest outflow of residents in July and August, with 40,432 Redfin users leaving the city.

Miami was the most popular destination, with more than 8,000 Redfin users moving to the city, “continuing a multi-year streak of the South Florida subway taking first place,” according to the Redfin report.

The remaining top 5 most popular cities to relocate to were Sacramento, California, San Diego, California, Las Vegas, Nevada, and Tampa, Florida.

“Although property prices in many of the popular travel destinations have increased significantly during the pandemic, they are still more affordable than where homebuyers come from,” the Redfin report said. “The typical Las Vegas home, for example, sold in August for $416,000, half the median of $845,000 in Los Angeles, the main moving-in area.”

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Cancellations in the Sun Belt region

Concerns about affordability were also the reason a growing number of homebuyers were stepping back from stores, Redfin said. Home sale cancellation rates rose to 15% in August, up from 12.1% a year earlier. That’s about 64,000 home purchase deals that failed, the report says.

These four Sun Belt locations — Las Vegas, Nevada, Phoenix, Arizona, Tampa, Florida, and San Antonio, Texas — are among Redfin’s top 10 migration destinations. But they were also among the cities with the highest churn rates.

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“These areas initially attracted home seekers because they were relatively affordable, but rising demand caused prices to skyrocket, making them less attractive to many homebuyers,” Redfin said.

And that reduced homebuyer appetite meant those still looking for homes had more leeway to pull out of business, the report said.

“Funding and valuation risks in a contract mean that a buyer can cancel their purchase if there is a problem with the home, they cannot get a mortgage, or the valuation differs from the agreed amount,” the Redfin report said. “Some buyers may also be pulling out of deals waiting to see if house prices fall.”

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