People in expensive, high-tax coastal markets like San Francisco, New York and Los Angeles, searched for homes in more affordable metros with lower taxes like Sacramento, Phoenix, Las Vegas and Nashville, according to the latest Migration Report for the fourth quarter of last year from Redfin (www.redfin.com), the next-generation real estate brokerage.
Of the 22% of Redfin.com home searchers who looked to move to another metro area, the following key trends emerged:
- San Francisco, New York, Los Angeles, Washington, D.C. and Chicago posted the highest net outflows.
- Fast-growing, mid-tier metros in the Sunbelt, including Phoenix and Las Vegas, and the South, including Atlanta and Nashville, had the highest net inflows.
- Seattle saw more users looking to leave than to move to the area for the first time since we began tracking this data at the beginning of 2017.
The analysis is based on a sample of more than 1 million Redfin.com users searching for homes across 75 metro areas from October through December. Redfin began systematically tracking home-buyer migration at the beginning of 2017 and these fourth-quarter trends follow the migration patterns observed throughout last year.
Redfin expects that in 2018, this migration pattern will intensify as tax reform becomes a reality and more people choose to relocate in search of a lower cost of living.
“People leaving coastal hubs in search of affordability has been a consistent trend for the last five years,” said Redfin chief economist Nela Richardson. “Late last year there was a twist. Many of the popular migration paths that we saw Redfin.com users exploring yielded tax benefits along with increased affordability.”
By comparing annual property, state and local tax burdens from the 2016 Tax Rates and Tax Burdens in the District of Columbia: A Nationwide Comparison report, we’re able to estimate what a move from one metro to another might entail from a tax perspective. For example, 18.2% of all Redfin.com searches for homes in Las Vegas in the fourth quarter came from Los Angeles; a family earning $150,000 who made this move could save $7,785 in taxes and would likely pay less for a similar home, given that the typical home in Las Vegas costs about $333,000 less than in Los Angeles. Similarly, the 9% of New Yorkers looking to leave who considered Atlanta might save $5,809 in taxes and benefit from a $161,000 lower median home sale price.
“Lower taxes and more affordable housing have historically drawn Californians away from the coast to places like Nevada and Arizona,” said Heidi Ludwig, a Redfin Agent in Hermosa Beach. “The recent changes in tax law have been coming up in my conversations with prospective home sellers. Last year, several of my home-selling clients followed their employer, Toyota, to its new facility in Plano, Texas. I expect to see more people move in the same direction this year, but for different reasons including taxes and overall affordability.”
Seattle showed a negative net outflow in the fourth quarter, a first since we began tracking migration patterns at the beginning of 2017. Among local users who were looking to leave, 10.6% were eyeing Los Angeles, followed by Bellingham, Wash., Portland and Phoenix, each of which captured at least 8% of Seattleites looking to leave.
| Moving Out – Metros with the Highest Net Outflow of Users and Their Top Destinations | |||||
| Rank | Metro* | Net Outflow† | Portion of Local Users Searching Elsewhere | Top Destination | Top Out-of-State Destination |
| 1 | San Francisco, CA | -15,489 | 19.4% | Sacramento, CA | Seattle, WA |
| 2 | New York, NY | -12,532 | 33.4% | Boston, MA | Boston, MA |
| 3 | Los Angeles, CA | -11,326 | 15.5% | San Diego, CA | Las Vegas, NV |
| 4 | Washington, DC | -3,892 | 10.2% | Philadelphia, PA | Philadelphia, PA |
| 5 | Chicago, IL | -1,772 | 8.9% | Los Angeles, CA | Los Angeles, CA |
| 6 | Houston, TX | -321 | 24.9% | Austin, TX | Los Angeles, CA |
| 7 | Seattle, WA | -258 | 10.4% | Los Angeles, CA | Los Angeles, CA |
| 8 | Detroit, MI | -117 | 25.2% | Chicago, IL | Chicago, IL |
| 9 | Eugene, OR | -83 | 33.1% | Portland, OR | Seattle, WA |
| 10 | Omaha, NE | -50 | 29.6% | Las Vegas, NV | Las Vegas, NV |
| Moving In – Metros with the Highest Net Inflow of Users and Their Top Origins | |||||
| Rank | Metro* | Net Inflow† | Portion of Searches from Users Outside the Metro | Top Origin | Top Out-of-State Origin |
| 1 | Sacramento, CA | 3,888 | 37.7% | San Francisco, CA | Seattle, WA |
| 2 | Phoenix, AZ | 3,132 | 30.1% | Los Angeles, CA | Los Angeles, CA |
| 3 | Las Vegas, NV | 3,075 | 43.4% | Los Angeles, CA | Los Angeles, CA |
| 4 | San Diego, CA | 3,043 | 26.4% | Los Angeles, CA | Seattle, WA |
| 5 | Atlanta, GA | 2,700 | 25.9% | New York, NY | New York, NY |
| 6 | Portland, OR | 2,287 | 16.4% | San Francisco, CA | San Francisco, CA |
| 7 | Dallas, TX | 1,788 | 22.0% | Los Angeles, CA | Los Angeles, CA |
| 8 | Nashville, TN | 1,582 | 32.4% | New York, NY | New York, NY |
| 9 | Boston, MA | 1,574 | 12.6% | New York, NY | New York, NY |
| 10 | Austin, TX | 1,490 | 24.8% | New York, NY | New York, NY |
| *Combined statistical areas with at least 500 users in Q4 2017 | |||||
| †Among the one million users sampled for this analysis only |
To read the full report, complete with an interactive data map of metro-to-metro migration trends and full methodology, please visit: https://www.redfin.com/blog/2018/02/q4-migration-report.html
