The search for affordable housing remains a top motivator for homebuyers who are looking to relocate to a new city, according to Redfin’s third quarter migration report.
In the third quarter of 2022, a record 24.2% of homebuyers looked to move to a different metro area, up from 23.3% in the second quarter and 21.6% a year ago, according to Redfin.
High mortgage rates, inflation and still-high home prices have deterred many would-be homebuyers from moving. However, the buyers who remain in the market are likely to prioritize moving to relatively more affordable cities to find their new homes, Redfin said.
"With a recession looming and household expenses high, many people can’t afford to buy a home in an expensive area and/or want to save money in case of an emergency, which makes relocating somewhere more affordable an attractive option," Chen Zhao, Redfin’s economics research lead, said.
"Migration will likely slow in the coming months because the softening labor market and job losses will push more people to stay put or move in with family, though some may need to relocate for new employment opportunities," Zhao continued.
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Buyers are still drawn to ‘sunny, relatively affordable areas’
Sacramento topped the list of the most popular destinations for homebuyers who are looking to relocate, followed by Miami, Las Vegas, San Diego and Tampa, the report said.
Sacramento’s median home price currently sits at around $560,000, which is higher than the national average but relatively cheaper than the $1.5 million median sale price of homes in nearby San Francisco, Redfin said.
Buyers moving to Miami, where the median home price is $475,000, typically come from New York, where the median home sale price sits at $680,000.
"More than half of my buyers in Sacramento are from outside the area," Samantha Rahman, a local Redfin agent, said. "They’re mostly remote workers coming from the Bay Area who may need to commute to the office a few times a month but are saving significantly on housing costs."
"It makes even more sense to relocate to a more affordable region now than it did when mortgage rates were low, as lower-priced homes offset some of the expense of high rates and rack up less interest," Rahman continued.
If you want to take out a mortgage or refinance your existing mortgage, you can use an online marketplace like Credible to help you compare lenders and find the best rate for you.
Economists' tips for buying a home in a high-rate environment
For Americans who have no choice about whether to move or stay put, here’s the advice that Redfin economists gave to navigate the challenging environment:
Now is not the time to stretch your budget
Higher interest rates and inflation have made many things more expensive.
"Ensure you have a pad of savings to cover emergencies and that every dollar isn’t going to your down payment and monthly mortgage payments," Daryl Fairweather, Redfin chief economist, said in a statement.
Search for homes that have been on the market for a while
Taylor Marr, Redfin's deputy chief economist, suggested buyers look at homes that have been listed for 30 or 60 days and put in a low offer that incorporates how much they calculate the housing market will drop over the next year.
"When prices were soaring at the height of the pandemic and expected to grow 10% year over year, buyers often priced that into offering over asking price, and it also works the other way around," Marr said.
If you think you’re ready to shop around for a home loan, you can visit Credible to find your personalized interest rate without affecting your credit score.
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