Homebuyers are leaving large metro areas such as New York City and San Francisco and seeking a more affordable cost of living in places like Phoenix, Miami, and Las Vegas.
A new analysis from the online real estate brokerage firm Redfin.com found that approximately 24% of homebuyers are looking in a different metro area than where they currently live.
Out of 100 metro areas examined, Redfin found cities such as Sacramento, Miami, Las Vegas, Tampa, and Dallas are the more popular options for homebuyers. The study also says that more people working remotely and 30-year fixed mortgages doubling to 7% is fueling the trend.
However, mortgage demand is dropping as interest rates are rising, leading to falling housing prices in pandemic-era hotspots across the country, according to a Mortgage Bankers Association report.
MBA predicts 20% drops in housing prices in Phoenix, Miami, and Austin, Texas.
Mortgage applications dropped by 14.2% in the last week of September.
The fastest-growing markets from 2020 to early 2022 are declining because the demand increase created an inflated market. Redfin economist Taylor Marr said affordability concerns have now contributed to a drop in mortgage demand.
“Sellers should anticipate that buyers are unwilling or unable to pay the price similar to what their neighbor’s home sold for a month ago,” Marr said.
The trend of leaving big cities for places like Austin lines up with Redfin’s ranking of cities with the highest proportion of searches made by local users looking to relocate. The majority of homebuyers looking to relocate are from New York City, Detroit, Chicago, and Los Angeles.