According to a new report from Redfin [1], the average out-of-towner moving to Nashville in 2021 had $736,900 to spend on a home, 28.5% higher than the $573,400 average budget for local buyers. Nashville was cited as having the biggest budget gap among the cities included in its analysis.
Philadelphia followed Nashville, with an average out-of-town budget of $559,200—28.4% higher than the average local budget. Next comes New York City, where the average out-of-towner had a 26.5% higher budget than the average local, and Atlanta, where migrants had a 26.1% bigger budget. Miami rounds out the top five, with an average out-of-town budget 25.1% higher than that of locals. Out-of-towners have higher budgets than locals in 42 of the 49 cities included in Redfin’s report [2].
Many homebuyers were able to broaden their searches in 2021, as many employers made remote-work options permanent. Remote workers are now able to move somewhere more affordable than their hometown, resulting in out-of-towners commonly having bigger budgets than locals. Factors include coming from a place with higher salaries, and/or they may have sold a home in a more expensive city.
Consumers are moving from areas with sky-rocketing home prices like coastal California, to an area that’s still comparatively affordable, like Nashville or Atlanta. The typical home in Los Angeles, which is the most common origin of people moving to Nashville, sold for $950,000 in December compared to $411,000 in Nashville. The typical home in New York City, the most common origin of people moving to Atlanta and Miami, sold for $785,000, compared to $385,000 in Atlanta and $459,000 in Miami.
The influx of out-of-towners with big budgets is a contributing factor in the rise of home prices in popular migration destinations, out-pricing many locals. Nashville home prices still remain lower than many expensive coastal cities, but were up 22.6% in December from the year before. While Nashville may be a good deal for buyers coming from Los Angeles, many locals are forced to continue renting.
“We’re seeing a lot of out-of-state transplants, mostly from states like California that have an income tax,” said Hope Geyer, a Redfin agent in Nashville. “People moving from the West Coast will pay way over asking price without batting an eye. In their eyes, they’re getting a deal. It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one.”
Locals had higher budgets than out-of-towners in seven of the 50 cities in this analysis, most of which are in California: Fremont, Pleasanton, San Jose and San Francisco, and Riverside. Baltimore, Maryland and Frisco, Texas were also among the list.
The average budget for Fremont locals was approximately $1,560,600, around 6% higher than the average budget for out-of-towners—a larger premium than any other city in the analysis. Followed by Pleasanton, where locals had an average budget of $1,752,400, roughly 5% higher than the average migrant budget. Bay Area locals tend to have bigger budgets than people moving in from out of town because they have some of the highest incomes in the nation.
Click here [2] to read Redfin's full report on migrant buyers.