One-quarter of American homebuyers, a new record level, are looking to move to a different metro area, according to data from Redfin (NASDAQ:RDFN). In comparison to current level of 25.4% homebuyers looking outside of their area, the share considering relocation was 23% at this time last year and below 20% prior to the pandemic.
Redfin attributed this environment to elevated mortgage rates, which makes areas with more affordable homeownership opportunities more attractive. Phoenix is the most popular destination for homebuyers looking to move to a different part of the country, followed by Las Vegas and the Florida metros Miami, Tampa, Orlando, North Port-Sarasota and Cape Coral. At the other end of the spectrum, expensive metro areas San Francisco, New York, Los Angeles, Washington, D.C. and Boston are experiencing the highest levels of outbound migration.
Curiously, climate change is not having an impact on attracting new buyers. Several of the other popular destinations for homebuyers also face extreme climate risks – parts of the Sacramento area face high wildfire danger and many Florida metros are susceptible to flooding. Redfin also noted that insurance companies have stopped providing coverage to homeowners in California and Florida based on the high risks of damage by natural disasters.
“Climate risks haven’t yet stopped many homebuyers from moving into areas that don’t have enough water, like Phoenix, and places that could eventually be underwater, like coastal Florida,” said Redfin Chief Economist Daryl Fairweather. “That’s because even though Sun Belt home prices soared during the pandemic, those metros remain a bargain for people relocating from expensive coastal cities. Arizona’s recent limit on new construction isn’t likely to deplete inventory enough—or push prices up enough—to change that calculus much in the short term.”