As homebuyers explore ways to increase their chances of success in the face of intensifying cost pressures, new research indicates that interest in moving is on the rise. In the first quarter of 2022, 40.5% of prospective buyers on Realtor.com saw listings for homes that are out of its current condition, compared to 36.4% in 2021 and 33.4% in 2020.
Where they are going? The top 10 destinations in ranking order were El Paso, Texas; Albuquerque, New Mexico; Washington DC; Birmingham, Ala.; Hartford, Conn.; Omaha, Nebraska; McAllen, Texas; New York; Augusta, Ga.; and Greensboro, North Carolina.
“After two years of remote work due to the pandemic, offices have started to reopen, but instead of seeing a slowdown in the number of people interested in homes outside of the state, we are seeing an acceleration,” said Realtor’s chief economist. com, Danielle Hale.
“Taking a closer look at the top destinations, we see some very different trends driving the desire to live out of state and the diverse needs of homebuyers,” he explained. “First, affordability remains a key focus for buyers, with demand for less expensive areas increasing in recent months as inflation and mortgage rates increase the cost pressures buyers face. Then, the flexibility enabled by broader adoption of remote work has fueled interest in sunnier climes like the Sun Belt. And finally, some people are simply ready to get back to normal, with some shoppers wanting to live an inner-city lifestyle that pushes two big cities into the top 10.”
With tighter budgets, shoppers broaden search areas for affordability
While Americans are expected to have a better chance of finding a home in 2022, rapidly intensifying cost pressures are creating a greater sense of urgency for many buyers to find a home within their budget. With rising inflation and mortgage rates aggravating record home sale prices and rents, 2022 homebuyers are highly motivated to explore relatively affordable markets where higher incomes can lead to greater spending power.
And search trends from January to March suggest that many potential buyers are doing just that. In eight of the top 10 relocation destinations, listing prices per square foot were lower than the national average ($206). Additionally, while rising demand is driving double-digit annual price per square foot growth in most (nine) of these markets, half posted profits below the national rate for Q1 2022 (+15.7% ).
For example, Market No. 7 in McAllen, Texas, offered the most affordable home price per square foot among the top 10, at a median of $125. While that represented a 13.8% year-over-year increase, McAllen’s median listing price per square foot was still lower than its top source of out-of-state buyer demand: Washington, DC ($277).
With more flexibility, some homebuyers migrate to warmer climates
Cost pressures may be a contributing factor for some out-of-state homebuyers, but others might see relocation as an opportunity to explore areas they couldn’t have before the Covid pandemic, with this flexibility enabled by trends like rising in remote work. Realtor.com search trends for the first quarter of 2022 suggest that a growing number of home buyers are potentially heading to areas that offer warmer climates. In fact, the Sun Belt metropolitan areas accounted for six of the top 10 relocation destinations, all of which posted higher annual gains in the share of out-of-state listing viewers than the national rate, led by El Paso (+11.6 percentage points). ).
To further illustrate the increased demand from real estate markets that offer warmer climates, five of these six Sun Belt metro areas counted northern cities as the top sources of out-of-state demand. For example, Washington, DC and New York were among the top three areas where homebuyers searched for homes in market #9 Augusta, Georgia and market #10 Greensboro, North Carolina.
As some shoppers chase downtown life, demand from big cities returns
Although some of the top relocation destinations reflect trends that emerged during the pandemic, very different factors could be driving demand in others. With offices reopening and daily life returning to full swing in many downtown areas, major metropolitan areas accounted for two of the top 10 relocation destinations: Washington, DC at #3 and New York at #8 Also, the #5 spot went to Hartford, Connecticut, which some may see as a commuter city to New York.
Going further back in Realtor.com’s data history, to its Q1 2020 Cross-Market Demand Report, Washington, DC and New York were among the 10 markets where the onset of Covid was most pronounced and patterns shopping from home showed the impact. Across all of these metro areas, however, data for the first quarter of 2022 shows that out-of-state homebuyer interest is not only back on year-over-year growth, but is at the highest level of any quarter since 2022. first quarter of 2018.
Hale said, “In addition to the full uptick in out-of-state demand to New York, Washington, DC and Hartford, the fact that these markets have become top 10 destinations in the first quarter of 2022 indicates the return of some norms. pre-Covid. It just comes down to the stage of life, to which housing decisions are often tied, as big cities have historically seen strong incoming demand from young buyers from across the country looking to settle down.”