U.S. home buyers are on the move, and about one in every five of them are not thinking local when they are looking for new places to live, either. According to a recent Redfin analysis of about 1 million Redfin users looking for new homes in 75 major metro areas, a lack of budget-friendly housing options is hurting resident loyalty to their current cities. Nela Richardson, the company’s chief economist, observed, “For many, the only path to homeownership is to pack up and move out.”
In light of the affordability issue, it is not surprising that the top three cities for out-of-town buyers are all located out west, where renters seeking affordable housing options and homeowners who cannot afford to expand in expensive West-Coast metros might move. Sacramento, California, topped the list with nearly a third of all home-browsers being “out-of-town shoppers,” as Redfin labeled them. The majority of those out-of-town shoppers currently live in San Francisco, the fourth-most-expensive place to live in the United States (per Kiplinger) as of May 2017. San Francisco residents tend to want to move to Sacramento, if they wish to remain in California, and Seattle, Washington, if they plan to leave the state.
Phoenix, Arizona, placed second on the list of most attractive places for out-of-town buyers to land, with 27.9 percent of home-shoppers hailing from other locales. Good weather, positive tax benefits, and a thriving economy that is home to an increasing number of former Silicon Valley tech companies and Arizona’s own burgeoning high-tech economy all combined with significantly superior housing affordability make Phoenix a top target for Los Angeles residents. Los Angeles renters are among the most-burdened by their rent in the nation according to the NYU Furman Center and Capital One, who released a report last year indicating that four in every five LA renters pay more than a third of their income in rent and one in three paying more than half their income in rent.
Third on the list is Las Vegas, which has straggled behind Phoenix and Sacramento in terms of its overall housing recovery but stands to benefit as a result when it comes to attracting out-of-town buyers. Las Vegas is by far the most affordable destination of the top three, which is probably why one in three buyers shopping from other destinations are from Los Angeles in Las Vegas’ case as well. While Las Vegas recently made headlines for its shortage of “affordable housing” for low-income earners, relatively speaking it offers a far more affordable option for a buyer used to renting or owning in California. Real estate investors from all over the country are also active in the area, snapping up rental properties in hopes of catering to households who opt to rent in the area rather than buy. Las Vegas and the surrounding area, including Reno, Nevada, are experiencing a mini “tech boom” as well thanks to the West-Coast exodus and activity in the area from innovators like Tesla and Apple.
Redfin noted that on a state level, Florida and Texas were the most popular destinations for out-of-town shopperse. “These states have an attractive combination of relatively affordability,” noted Taylor Marr, a Redfin data scientist.
Carole Ellis is the editor-in-chief of Think Realty Magazine. Learn more about the publication at https://thinkrealty.com/membership/