You hear a lot of people claim in the news that California and New York are losing residents and that rising interest rates in those states would lead to a real estate crash in those markets.
But is that actually what's going on? Let’s look at the data from this great article by Redfin.
According to Redfin’s research, 32.3% of their users nationwide have reportedly looked to relocate to a different metro in Q1 of this year.
They used Seattle for their study, although Seattle is not in the top 2, to show that people are moving because home prices are increasing dramatically.
In their data, San Francisco, Los Angeles, and New York took the top three spots of cities that have the highest net outflow of users. And those people’s top destinations are Sacramento, San Diego, and Miami, respectively.
From this, it is clear that not all residents from California are moving out of the state completely. They just relocate to a city with more affordable housing prices than San Francisco and Los Angeles.
Those that migrate out of state from San Francisco tend to head to Seattle, which is odd given that housing in that area is still quite costly. I believe this is due to the fact that homebuyers in San Francisco can still afford the higher costs of living in Seattle.
People from Los Angeles, which is where I live, find moving further south to San Diego attractive. Or, they move to Phoenix. Residents of Seattle also find Phoenix appealing.
New Yorkers are moving to Florida, particularly in Miami, and Portland residents are leaving for Seattle, which is just a two-hour drive away.
Redfin also shows data on where most people move to.
The top spot goes to Miami, and most of their migrators came from New York. Phoenix comes in second, with most people coming from Los Angeles, and third on the list is Tampa, FL with people moving in from Orlando and New York.
Sacramento, CA makes it to number four, and it has attracted a lot of people relocating out of San Francisco and Seattle.
Los Angeles is losing people to Phoenix and Las Vegas, NV. And people from Chicago move to either Cape Coral or North Port in Florida.
It looks like Florida is a very attractive place to relocate to right now.
Ultimately, what I concluded from this data is: that the desire to own homes, the American Dream, is still alive. It’s still ongoing!
And even though interest rates are on the rise (who knows where they’ll end up?) it’s just going to push those people who can’t afford where they’re at right now to just move to areas where they can. This is how you can use data to market and attract people from one area to another.
Also, judging by the data, it is not enough to conclude that people are leaving California and New York. Well, maybe it is a little true for New York.
As real estate agents, we need to think strategically. Where can we start looking where prices are going to go up next? With so many people relocating to Miami and Phoenix, where do you think prices will rise next?
This is a question that I get often: “Where should I invest in real estate?”
Always use data to make smart decisions.
There are two other things I want to leave you with:
As interest rates go up, people are just going to these areas where it is more affordable. Right now, it seems to be Phoenix and other parts of Florida, although Miami is not affordable unless you have previously resided in San Francisco or New York. These two states are very unaffordable for a lot of people.
This is why we get multiple offers right here. So when you see stuff in the news, like California is losing a bunch of residents, always get into the data to get a clear picture of what is actually happening.
And, more importantly, people are still buying homes. Real estate is not going anywhere. You talk to people, and still, their number one dream is to own a home. They want to stop renting, because the rent is so high.
Hope that helps. And let me know what you think. Interact with me on my social media to let me know your thoughts. I always love to exchange ideas with you.
