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The Great Migration of 2018

mapWith mortgage rates rising in tandem with interest rates, affordability problems continue to be a serious issue for the industry—and an issue that in some markets is only getting worse. This is especially true in the priciest metro areas, leading potential homeowners to seek a home elsewhere, often states away. An analysis by Redfin, a real estate brokerage, analyzed a random sample of more than 1 million of its website’s users across 80 metro areas for the period lasting from July through September 2018.

The major fact highlighted by the analysis is the accelerating trend of homebuyers who seek to flee metro areas which in the last few years have seen prices soar. Driven by high costs and in search of something practical, these prospective homebuyers are targeting the South as well as the middle of the country for their next home. A total of 25 percent of Redfin’s users in Q3 2018 sought a home outside their current metro area, 3 percentage points higher than the same quarter last year.

San Francisco, New York, Los Angeles, Washington, D.C., and Denver were the five metro areas that saw the highest netflow out, a number calculated by how many people were looking to leave the metro area minus how many were planning to move in.  Nearly 22 percent of San Francisco Bay Area residents looking to move are searching elsewhere, up 4 percentage points from last year. The majority of these San Franciscans are heading to Sacramento and Seattle, whereas Portland is taking in a greater percentage of Bay Area residents than anyone else.

More than a third of New Yorkers (34 percent) want to leave the city, a number that has remained exactly the same as it was last year. A large number of these New Yorkers are hoping to end up in Boston, but sizable numbers could very well alter demographics in other metro areas like Atlanta, San Diego, Miami, and Nashville.

Denver has moved steadily up the list, having debuted on the top-ten areas with greatest outflow only in Q1 2018. In Q2, Denver dropped to sixth and now finds itself in fifth place. A year ago, 17 percent of those living in the Denver area looking to move were planning on going elsewhere; that number has now increased to 24 percent. Of these, a little less than a quarter plan on remaining in the state, relocating to either Colorado Springs or Fort Collins.

The states with the greatest net flows in are Florida, Texas, and Tennessee, but the specific metro areas seeing the biggest inflows are Sacramento, Atlanta, Phoenix, and Portland. All are big cities where employment prospects are favorable and home prices still relatively affordable—at least in comparison to the areas they are fleeing. Median house prices in the regions seeing the greatest net inflow average around $150,000 less than the regions with the greatest net outflow.

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