With mortgage rates and home prices high, more homeowners are staying put, according to a report by Redfin.
The number of homeowners looking to move to a different metro area started to decline in the fall of 2023, dropping to 23.9% in November 2023. That marked the lowest share in a year and a half and below the 26% seen last summer.
While some of it also has to do with remote work becoming less popular with employers, the rate of mobility among homeowners has steadily been decreasing since the 1980s as older Americans have decided to age in their current homes.
Still, Redfin says migration rates of homeowners considering moving are above pre-pandemic levels, with Americans hunting for bargains.
Where Homebuyers Are Moving
According to Redfin, the most popular migration destinations have lower price points than where most buyers are moving. Redfin measures popularity by net inflow, or how many more Redfin.com users looked to move into an area than leave it.
Spokane, Washington, made the list for the first time, likely due to its cheaper pricing and proximity to Seattle. Other areas that were also on the list are known for being relatively affordable and attractive to homebuyers moving from expensive metros.
| Rank | Metro | Net Inflow, Nov. 2023 | Net Inflow, Nov. 2022 | Top Origin | Top Out-of-State Origin |
|---|---|---|---|---|---|
| 1 | Sacramento, CA | 5,100 | 7,000 | San Francisco, CA | New York, NY |
| 2 | Las Vegas, NV | 3,800 | 6,400 | Los Angeles, CA | Los Angeles, CA |
| 3 | North Port-Sarasota, FL | 3,700 | 3,700 | New York, NY | New York, NY |
| 4 | Cape Coral, FL | 3,700 | 4,000 | Miami, FL | Chicago, IL |
| 5 | Salisbury, MD | 3,600 | 2,000 | Washington, D.C. | Washington, D.C. |
| 6 | Myrtle Beach, SC | 3,600 | 2,800 | Washington, D.C. | Washington, D.C. |
| 7 | Orlando, FL | 3,500 | 3,300 | New York, NY | New York, NY |
| 8 | Portland, ME | 3,400 | 2,800 | Boston, MA | Boston, MA |
| 9 | Nashville, TN | 3,000 | 2,800 | Los Angeles, CA | Los Angeles, CA |
| 10 | Spokane, WA | 2,500 | 2,300 | Seattle, WA | Los Angeles, CA |
Where Homebuyers Are Leaving
More homebuyers are leaving Los Angeles than any other metro area, Redfin found, beating out the Bay Area, which lost its No. 1 spot for the first time in two years. The Bay Area was second, with New York coming in third.
Coastal areas and big cities tend to top the list of homebuyers leaving because they are too expensive, Redfin found.
| Rank | Metro | Net Outflow, Nov. 2023 | Net Outflow, Nov. 2022 | Top Destination | Top Out-of-State Destination |
|---|---|---|---|---|---|
| 1 | Los Angeles, CA | 26,100 | 30,300 | Las Vegas, NV | Las Vegas, NV |
| 2 | San Francisco, CA | 25,400 | 32,000 | Sacramento, CA | Seattle, WA |
| 3 | New York, NY | 24,900 | 20,700 | Miami, FL | Miami, FL |
| 4 | Washington, D.C. | 13,300 | 16,100 | Salisbury, MD | Salisbury, MD |
| 5 | Seattle, WA | 11,900 | 1,300 | Spokane, WA | Phoenix, AZ |
| 6 | Chicago, IL | 7,600 | 7,100 | Cape Coral, FL | Cape Coral, FL |
| 7 | Boston, MA | 5,000 | 6,100 | Portland, ME | Portland, ME |
| 8 | Philadelphia, PA | 3,000 | 1,300 | Salisbury, MD | Salisbury, MD |
| 9 | Detroit, MI | 2,100 | 3,400 | Washington, D.C. | Washington, D.C. |
| 10 | Denver, CO | 2,000 | 3,200 | Chicago, IL | Chicago, IL |
Why Homeowners Aren’t Really Moving
There are several reasons why, overall, homeowners are no longer looking to move. One reason is that there is less flexibility around remote working, as more employers want workers back in the office.
Another reason may have to do with the general decline in house sales, as record mortgage rates and prices have kept many would-be homebuyers on the sidelines. Many homeowners who would have sold have decided to stay in their current homes because their mortgage rates are simply too good to give up.
This lock-in effect led to a 57% reduction in home sales in the fourth quarter of 2023 and prevented 1.33 million homes from being sold between the second quarter of 2022 and the end of 2023, according to a report from the Federal Housing Finance Agency.
Economists Jack Liebersohn and Jesse Rothstein found that mobility rates fell for those with a mortgage in 2022 and 2023, while there were no declines in mobility for homeowners who didn’t have a mortgage or for renters. In other words, those with a mortgage are more likely to stay put.
While there was an increase in the past few years in the number of people looking to move thanks to pandemic-driven remote work, overall mobility over the last few decades seems to be down. According to one economist, the moving rates have been declining steadily and were below 10% in 2018 compared to 20% in the mid-1980s.
Meanwhile, a survey from the New York Federal Reserve found that few U.S. homeowners are planning to move in the next three years, with around half of respondents saying the probability that they will move is less than 10%.
What This All Means for Real Estate Investors
Homeowners are staying put for longer than they were before, staying for an average of 11.9 years compared to 6.5 years in the early 2000s, according to Redfin. With fewer people moving, some towns and states are even paying people to move there.
All this is likely contributing to the housing shortage. There is a housing deficit of at least 3.8 million units, and it’s likely to get worse.
However, this slump in migration may not be forever. With mortgage rates likely to go down at some point when the Federal Reserve decreases rates, homeowners may be enticed to put their homes on the market. This could spur an increase in relocations if the supply can keep up with demand. But if the housing supply crunch continues, it could still be a while before house prices drop and homebuyers feel it’s worth their while to move—creating opportunities for real estate investors.
To learn more about Redfin’s methodology, click here.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
