Rise in those seeking more affordable metros
There has been an increase in those living in expensive high-tax areas searching for homes in more affordable metros.
That’s the finding of an analysis by Redfin which used a sample of 1 million of its users who searched for homes across 80 metro areas from April to June 2018.
The share of those looking to move to another metro was 24%, up from 21% a year ago.
Ranking metros by net outflow, San Francisco, New York, Los Angeles, Washington, and Chicago were the top 5.
"With home prices reaching new heights in many metro areas, it's no surprise people are continuing to move away from expensive metros in search of homeownership," said Taylor Marr, Redfin senior economist. "Last year's tax reform poured fuel on the fire. By capping mortgage interest and state and local tax deductions, there is an even greater incentive for homebuyers to consider moving to a lower-tax state."
Across the ten metros that saw the highest number of people leaving in the last quarter, the local tax burden (relative measure of average sales, income, and property taxes) was three times higher than the top 10 destinations.
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Table: Top 10 Metros by Net Outflow of Users and Their Top Destinations |
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Rank |
Metro* |
Net |
Net |
Portion of Local |
Top Destination |
Top Out-of-State |
|
|
1 |
San Francisco, CA |
27,849 |
16745 |
22.1% |
Sacramento, CA |
Seattle, WA |
|
|
2 |
New York, NY |
23,559 |
15644 |
36.3% |
Boston, MA |
Boston, MA |
|
|
3 |
Los Angeles, CA |
13,370 |
13109 |
15.5% |
San Diego, CA |
Phoenix, AZ |
|
|
4 |
Washington, DC |
5,900 |
5499 |
10.0% |
Philadelphia, PA |
Philadelphia, PA |
|
|
5 |
Chicago, IL |
3,428 |
2366 |
9.1% |
Phoenix, AZ |
Phoenix, AZ |
|
|
6 |
Denver, CO |
3,007 |
338 |
22.6% |
Colorado Springs, CO |
Seattle, WA |
|
|
7 |
Milwaukee, WI |
787 |
226 |
39.1% |
Chicago, IL |
Chicago, IL |
|
|
8 |
Houston, TX |
336 |
317 |
25.2% |
Austin, TX |
Chicago, IL |
|
|
9 |
Eugene, OR |
288 |
-201 |
44.3% |
Portland, OR |
Seattle, WA |
|
|
10 |
Detroit, MI |
263 |
309 |
21.9% |
Chicago, IL |
Chicago, IL |
|
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*Combined statistical areas with at least 500 users in Q2 2018 †Among the one million users sampled for this analysis only |
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Redfin commissioned a survey in May 2018 which added more insight into the reasons why people are moving to new metros.
Of the 1,300 people who had bought a home in the past year:
- 8% of people said they shifted their search to a state with lower taxes due to the new tax law.
- 9% said they shifted their search to nearby cities with lower taxes.
- 10% said they bought a less expensive home because of the decreased benefits on high-priced homes.
- 10% bought a more expensive home because their after-tax income grew.
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Rank |
Metro* |
Net |
Net |
Portion of Searches from Users Outside the Metro |
Top Origin |
Top Out-of- |
|
|
1 |
Phoenix, AZ |
6,349 |
3849 |
34.0% |
Los Angeles, CA |
Los Angeles, CA |
|
|
2 |
Sacramento, CA |
6,208 |
4833 |
39.9% |
San Francisco, CA |
Seattle, WA |
|
|
3 |
Atlanta, GA |
5,112 |
2767 |
26.7% |
New York, NY |
New York, NY |
|
|
4 |
Las Vegas, NV |
3,786 |
3509 |
41.4% |
Los Angeles, CA |
Los Angeles, CA |
|
|
5 |
Portland, OR |
3,614 |
1190 |
18.2% |
San Francisco, CA |
San Francisco, CA |
|
|
6 |
Austin, TX |
3,212 |
1655 |
27.4% |
San Francisco, CA |
San Francisco, CA |
|
|
7 |
Dallas, TX |
2,979 |
2036 |
22.3% |
Los Angeles, CA |
Los Angeles, CA |
|
|
8 |
Miami, FL |
2,575 |
1746 |
24.2% |
New York, NY |
New York, NY |
|
|
9 |
San Diego, CA |
2,537 |
5286 |
24.1% |
Los Angeles, CA |
Seattle, WA |
|
|
10 |
Nashville, TN |
2,462 |
1364 |
33.6% |
New York, NY |
New York, NY |
|
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*Combined statistical areas with at least 500 users in Q2 2018 †Negative values indicate a net outflow; among the one million users sampled for this analysis only |
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