Affordability driving Sun Belt moves, despite climate risks
The latest Redfin migration report found that more home shoppers are looking at lower-cost cities that have seen increasing climate-related dangers.
Key points:
- Sacramento and Las Vegas topped the list of cities where prospective out-of-town buyers were searching.
- Many of the most popular relocation destinations are more affordable than the cities buyers are leaving, but are also increasingly susceptible to extreme high temperatures and hurricanes.
- Searches don't necessarily lead to purchases, but they suggest future buying trends.
While home sales remain sluggish, many of those in the market to buy are looking at areas that are less expensive — but more susceptible to the effects of climate change.
The latest Redfin report on relocation found that 26% of those searching for homes on the website in August were viewing properties in other parts of the country. That's the highest percentage ever for the study, an indication that those entering the homebuying market may need to relocate for a job or are willing to move to a more affordable region.
Sacramento topped the list of relocation destinations, coming in just ahead of Las Vegas and three Florida metro areas. Dallas and Houston also made the top 10 list. With the exception of Portland, Maine, all of the top 10 relocation cities were in the Sun Belt.
The most popular relocation spots are generally less expensive than the cities home shoppers are moving from — more buyers are leaving San Francisco, New York and Los Angeles than any other metro. Most of the buyers considering Sacramento were from the Bay Area, for example, which has some of the highest home prices in the country. The typical home in the Sacramento metro area sells for $575,000, while a typical one in San Francisco sells for an eye-popping $1.48 million, according to Redfin data.
Data may inform future buying trends
Home searches, which the Redfin report is based on, do not always translate into purchases, of course. Ryan Lundquist, a Sacramento appraiser who runs Sacramentoappraisalblog.com, notes that Sacramento — despite being a popular search destination — is currently seeing very low home sales volume, with levels comparable to 2007.
"Thus, there is a disconnect between people who are searching for Sacramento on Redfin's website and what is actually happening," Lundquist wrote in a blog post. In a follow-up email, he added that he finds the research interesting and said it might foretell future buying trends when the real estate market starts to pick up again.
Climate concerns aren't stopping buyers from choosing high-risk areas
If home shoppers do end up buying homes in the top search destinations, that means more people will be moving to areas facing increasingly intense weather events. Sacramento and Las Vegas, for example, are seeing more days of extreme heat, while Floridians have been pummeled by more intense hurricanes.
A recent Zillow survey found that 80% of buyers consider climate risk when searching for a home, but climate concerns aren't necessarily influencing purchase decisions. Most buyers surveyed were considering moving to an area with the same or higher climate risks, while just 23% were looking at regions with lower risks.
The migration report pointed to similar research by Redfin that found prospective buyers are thinking about climate risk, but ultimately, "affordability is often a more significant factor."
A separate survey of potential home sellers reinforced that idea, finding that respondents were more than twice as likely to say their motivations for moving were related to cost of living or home prices vs. concerns over climate change.