Out-of-Towners are leading to soaring home prices in relocation hotspots

Market Trend

Out-of-Towners are leading to soaring home prices in relocation hotspots

With continuous remote work and low mortgage rates spurring a migration of white-collar workers to warmer parts of the country, housing prices in the most popular relocation destinations are skyrocketing.

Prices are up as high as 30 percent in some relocation hotspots across the United States Sun Belt — where nine of the 10 most popular relocation destinations are — pricing out locals and aspiring relocators alike, according to a new report from the online brokerage Redfin.

“Moving across the country is now easier for many Americans, thanks to remote work. That cultural shift is here to stay,” said Redfin Deputy Chief Economist Taylor Marr. “What’s changing is the affordability of the most popular destinations. Some locals, particularly renters who aren’t able to take advantage of rising home values, are getting priced out of places like Phoenix and Austin as the cost of housing and other goods and services go up.”

Phoenix, Dallas, and Orlando, Florida, were the three most popular relocation destinations of 2021, According to Redfin. Phoenix drew an estimated 85,000 new residents, Dallas 56,000, and Orlando an additional 53,000.

In Phoenix, the typical home sold for 28 percent higher in December than it did a year ago — well above the national average of 15 percent — while the average monthly rent price increased by 26 percent year over year. Consumer goods are also rising higher in relocation destinations, with an influx of new residents driving up inflation, according to a separate Redfin report.

Part of the price growth is driven by out-of-towners with larger budgets entering the market.

“Sellers are listing their homes at higher prices than ever before, partly because of huge demand in the last year from out-of-towners,” Austin Redfin agent Barb Cooper said in a statement.“I recently had a couple looking for a 2,000-square-foot home anywhere in the Austin area for under $300,000. I had to tell them it doesn’t exist.”

Dallas has seen home sale prices jump 20.3 percent while rents jumped 28.5 percent, and Orlando home sale prices soared 22.8 percent with rents increasing 28.8 percent, according to Redfin data.

During the same period, all three cities saw the number of homes on the market decreased significantly. The amount of homes for sale decreased in Phoenix by 18.6 percent between 2020 and 2021, by 27.6 percent in Dallas, and by 29 percent in Orlando, according to Redfin.

Marr encouraged local governments to incentivize more building to make up for the increase in demand.

“New construction tends to be robust in sprawling Sun Belt cities, and local governments ought to continue to prioritize building new homes to keep up with ongoing demand,” he said.

Dec 30, 2021 Market Trend