The high cost of living in coastal metros such as Los Angeles, San Francisco, and New York is triggering an inland migration toward more affordable cities. That’s the conclusion of a new report by Redfin that looks at the rise of fast-growing non-coastal metros at the close of Q4 2017.
High property values and taxes in coastal metros are pushing migration inward, the report found. The five cities that saw the most outflow (in sheer volume) at the end of 2017 included San Francisco, New York, Los Angeles, Washington, D.C., and Chicago. According to Redfin, nearly 20 percent of San Franciscans using the company’s property search site were looking for homes elsewhere, with Sacramento, California, and Seattle, Washington proving the most popular destinations for fleeing residents of The Golden City.
Interestingly, “Seattle saw more users looking to leave than to move to the area for the first time since we began tracking this data at the beginning of 2017,” the report stated. At the same time, nine in 10 residents of Chicago, Boston, Washington, D.C., and Seattle who used Redfin were looking to stay within their respective cities.
A full third of New Yorkers using Redfin to search for new homes looked elsewhere. Redfin found that the favored destination for the more than 12,000 New Yorkers leaving is Boston. And while it only lost 83 people, Eugene, Oregon, saw a third of its Redfin users looking to move somewhere else.
According to Redfin, the cities seeing the biggest influx from outflow-heavy metros are Phoenix and Las Vegas in the Sun Belt and Atlanta and Nashville in the South. More than 18 percent of all Redfin searches for homes in Las Vegas in the fourth quarter came from Los Angeles, the report stated.
It’s estimated that a family earning $150,000 would save about $7,800 in taxes and likely pay less for a similar home if they moved from Los Angeles to Las Vegas. The typical home in Las Vegas costs about $333,000 less than in Los Angeles. Similarly, a New Yorker looking at Atlanta could save $5,800 in taxes for a house that’s around $161,000 cheaper, the report found.
“Lower taxes and more affordable housing have historically drawn Californians away from the coast to places like Nevada and Arizona,” said Heidi Ludwig, a Redfin Agent in Hermosa Beach. “The recent changes in tax law have been coming up in my conversations with prospective home sellers. Last year, several of my home-selling clients followed their employer, Toyota, to its new facility in Plano, Texas. I expect to see more people move in the same direction this year, but for different reasons including taxes and overall affordability.”
You can read the full Redfin migration report by clicking here.