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Where Are Households in High-Cost Markets Buying Homes?

Net Outward Migration from Higher-Priced Counties to Lower-Priced Counties

Archana Pradhan    |    Housing Trends

Home prices in many high-cost areas such as San Francisco, New York City, and elsewhere, have sky-rocketed and become less affordable. A combination of tight supply and high demand (driven by an improving economy and strong job growth) has led to the affordability challenges in these areas. Not all buyers are wealthy or have a high income to afford the rising housing cost in these areas. In search of affordability, some home buyers are either moving to neighboring counties with lower home prices or relocating to more distant and affordable locales. These buyers, seeking affordability and more space, have chosen to commute long distances or change jobs in order to reduce housing costs. This blog uses the CoreLogic Loan Application Database to highlight recent trends in owner-occupant homebuyer mobility in two San Francisco Bay Area’s counties, San Francisco and Alameda.1

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Among San Francisco County residents who want to buy a home, 50 out of 100 households that apply for a home-purchase mortgage loan were buying outside of the county. With the median home sale price over $1 million in San Francisco, on net San Francisco loses home buyers to lower-priced areas. Figure 1 summarizes the net flows of San Francisco home buyers during the first nine months of 2016.2 Almost one-half of the net outflow represents households buying in neighboring Alameda and Contra Costa counties where home prices are significantly lower; in fact, Contra Costa’s median sale price was less than half of San Francisco’s (see Figure 2). About one-fourth of the net outflow, representing nearly 10 percent of current residents who want to buy, are buying out of state. In contrast, more people from Santa Clara County moved into San Francisco than moved to Santa Clara County from San Francisco. Households from two higher-priced cities, Palo Alto and Cupertino, made up almost one-half of the net inflow from Santa Clara to San Francisco.

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Similarly, for Alameda County residents, 34 out of 100 households looking to buy took out a loan application on a home outside of Alameda, generally in lower-priced areas. Contrary to San Francisco, on net Alameda County gains homebuyers from higher-priced areas and loses homebuyers to lower-priced areas. During the first nine months of 2016, households buying in Contra Costa County represented more than one-third of Alameda County’s net outflow. (Figure 3). The median sale price in Alameda County was 30 percent higher than in Contra Costa.

In both San Francisco and Alameda counties, buyers were attracted to more affordable counties such as Contra Costa. High housing prices in these counties has been a principal cause of the net outward flow to lower-priced areas.



1 All Applications, accepted or not, through September 2016 were included in the analysis. Investors and second-home buyers were excluded in the analysis.

2 The Figure 1 net flow percentage is calculated relative to the total number of San Francisco residents that placed a home-purchase application. A positive (negative) value indicates net inflow (outflow) of home buyers to San Francisco. For example, “-6” means that the net loss of home buyers to another county equaled 6 percent of the number of San Francisco residents that applied for a home-purchase loan.

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