During the depth of the pandemic, rising house prices were often tempered by low interest rates, making mortgage payments more manageable. Today’s higher rates can easily add more than $100,000 to the cost of a typical loan. And while homes are now on the market longer, higher mortgage payments and general inflation have pushed many buyers out of the market.
What should a buyer do? Moving to a more affordable area is becoming a common tactic. By tracking searches on its platform, Redfin found that more buyers than ever are looking for homes outside their current cities.
In the first quarter of 2020, 26 percent of potential buyers on the platform searched another metropolitan area. By the second quarter of 2021, out-of-town searches reached 31.5 percent. After leveling off a bit, the upward arc of long-distance searches recovered, reaching a new high in the second quarter of 2022, when 32.5 percent of Redfin searches came from out-of-town buyers.
Of the more than 100 metropolitan areas surveyed in Redfin’s survey, Cape Coral, Florida, had the highest percentage of out-of-town buyers, with the largest number from Chicago. North Port, Florida, about an hour north of Cape Coral, had the second highest share of interested out-of-town buyers, also with the largest share from Chicago. The list of cities with the largest outflows was dominated by expensive locations, starting with San Francisco and followed by Los Angeles, New York and Washington, DC (Chicago in ninth place).
To complete the analysis, Redfin surveyed searches with approximately two million users in the second quarter of 2022. To focus on serious buyers, the survey was limited to users who viewed at least 10 homes in a city other than their own, and those searches must be at least 80 percent of the total of the user searches. Outbound searches from each city were subtracted from inbound searches to quantify outflow. This week’s chart shows the metropolitan areas with the highest percentage of out-of-town buyers.