Homebuying Patterns: Affordability, Climate and Jobs Affect Metro Choice

Los Angeles Had the Highest Net Out-Migration and Riverside Had the Highest Net In-Migration

By Archana Pradhan Consumer Behavior, Real Estate

Many factors influence a family’s choice when considering where to buy a home. When buyers choose to stay within their current metro, school district, crime statistics and commute time can influence their buying decisions. For buyers who decide to relocate, affordability, preferable weather and economic opportunities are often the driving factors. According to CoreLogic data, about four-in-five buyers in 2018 wanted to buy in the same metro, and one-in-five chose to move to another metro. The following examines the group of homebuyers who chose to relocate to a new metro. The analysis uses CoreLogic Loan Application Database to highlight the recent trends in owner-occupant homebuyer mobility and migration for 2018, focusing on the metros with the most in- and out-migration of potential homebuyers.[1]

U.S.Metro Areas Based on Their Net

Home prices in many high-cost metros such as San Francisco, New York and elsewhere, have sky-rocketed. 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. In addition to affordability challenges, some buyers looked to metros with better natural amenities (warm weather, proximity to beach and sunny days). According to CoreLogic data, homebuyers deciding to relocate to another metro were choosing adjacent, affordable metros in 2018. Figure 1 shows the U.S. metros based on their net in- and out-migration. The top 10 metros with largest net in-migration/out-migration are labelled in the map.

The Los Angeles metro experienced the highest net out-migration among all the metros over the last year, while the Riverside metro had the highest in-migration. Almost 25 percent of the applications in Riverside metro came from Los Angeles, mostly those seeking affordability. For example, the median sale price of homes in Los Angeles is almost double compared with Riverside’s median home price. Additionally, Los Angeles’ affordability index is much lower (67) compared to Riverside (105).

New York had the second highest out-migration, followed by San Francisco, San Jose and Washington. In contrast, the Dallas metro had the second highest in-migration, followed by Phoenix, Lakeland and Las Vegas.

The affordability pattern persisted. The median home price was around $542,000 in the top 10 out-migration metros, while it was about $248,000 in the top 10 in-migration metros. Similarly, the affordability index for the top 10 out-migration metros was around 108 compared to 136 for the top 10 in-migration metros.

Intermetro Potential Homebuyer Flows

Figure 2 shows a chord diagram tracking the inter-metro migration of potential homebuyers in the select metros in 2018. The highest-cost metros, such as Los Angeles, San Francisco and New York, lost applicants to more affordable contiguous metros. For example, Los Angeles and San Diego had a net loss of potential homebuyers to Riverside. Similarly, New York lost a good share of its potential homebuyers to affordable neighboring metros (such as Philadelphia, Allentown and Bridgeport) and warmer metros (such as Miami, Atlanta, Charlotte and Tampa) as well.[2]

Both the figures show that homebuyers were moving to more affordable metros and some homebuyers were moving to warmer metros, most likely retirees.

[1] The analysis is based on the number of applicants who applied for home-purchase mortgage loans in 2018. All home-purchase mortgage applications, accepted or not, January 2018 through December 2018 were included in the analysis. Investors and second-home buyers were excluded in the analysis.

[2] Allentown, Bridgeport, Charlotte and Tampa are not shown in Figure 2.

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