With existing homeowners locked into their low-rate loans, the proportion of home-seekers looking in a different metropolitan area from where they live is larger than ever, a report by Redfin says. The vast majority want to abandon coastal cities for the Sun Belt.
A whopping 25.4% of Redfin users looked at listings in a new city, up from 23% last year and below 20% before the pandemic.
In San Francisco, New York and Los Angeles, Redfin recorded more home searchers looking to leave than those looking to move there, a difference of more than 20,000 searchers each.
Prospective homebuyers are looking for spacious, sunny cities instead. Phoenix, Las Vegas and Miami ranked the highest in search demand. Redfin saw more users looking to move there than leave, a difference of around 6,000 per city.
This increase in out-of-city searches occurs despite challenges that come with living in Sun Belt cities. Phoenix, which saw the highest re-locator search volume, just announced a residential construction freeze because of a diminishing groundwater supply, which experts say will push up prices and choke supply in its suburbs.
Florida, which saw high search volume in Miami, Tampa, Orlando, Sarasota and Cape Coral, is struggling with rising home insurance prices. Seven residential insurers have failed since last February and the state government's financial stability unit is monitoring 24 more, according to the Insurance Information Institute.
A loophole in Florida allows for high legal fees in homeowner insurance claim lawsuits. Florida made up 76% of the nation's claim-related lawsuits, despite making up only 7% of actual homeowner insurance claims.
Redfin chief economist Daryl Fairweather said people want to move to Phoenix and Florida despite these issues "because even though Sun Belt home prices soared during the pandemic, those metros remain a bargain for people relocating from expensive coastal cities."
The median home sale price in San Francisco is currently $1.4 million, according to Redfin. In New York it's $819,900 and in L.A., it's $950,000. In Phoenix, it's only $439,950.
Because remote work remains prevalent, employees can often choose where to work without worrying about an impossible commute. Remote work accounts for 34% of U.S. employees worked at home last year, according to the Bureau of Labor Statistics.
Redfin's report noted that the total number of homeowners looking to move is not increasing: it has gone down 7% in the past year. With high mortgage rates and rising home prices, home searches on Redfin are at an all-time low.
