Out-of-towners have cash to spare when shopping for homes — at least compared with local families competing for those same properties.
That’s the takeaway from a new analysis conducted by real-estate brokerage Redfin RDFN, -20.18%, which looked at the gap between the budgets for people relocating to various markets across the country and the budgets that locals can spend to buy a home. Across the 49 cities Redfin analyzed, in all but seven out-of-town buyers had higher budgets.
Redfin limited its analysis to cities where there were at least 3,000 saved home searches on the company’s website from buyers located within the metro area and 3,000 from folks outside of the city in question. Redfin then determined the average maximum list-price filters each cohort of buyers saved before comparing them.
The largest gap was noted in Nashville, where the average budget for migrating buyers was 28.5% higher than the average budget for people who already resided in the city. Philadelphia was closed behind with a 28.4% gap, followed by New York (26.5%), Atlanta (26.1%) and Miami (25.1%).
Many of these cities are among the most popular for out-of-state movers, many of whom are relocating from costlier regions such as the Bay Area in search of a more affordable cost of living. But what’s affordable for someone from San Francisco looks very different than what’s affordable for someone in Nashville.
“‘People moving from the West Coast will pay way over asking price without batting an eye.’”
“People moving from the West Coast will pay way over asking price without batting an eye,” Hope Geyer, a Redfin agent based in Nashville, said in the report. “It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one.”
Redfin’s analysis did uncover some regions where this trend did not hold. Most notably, in the San Francisco Bay Area, locals tended to have higher home-buying budgets than people coming from another city or state. Redfin noted this could be a reflection of how much higher incomes are in the Bay Area than in other parts of the country. Other cities where locals had the upper hand included Baltimore and Frisco, Texas.
Redfin’s latest analysis builds on previous research the brokerage has conducted that has demonstrated how migration outflows from pricier markets are influencing the communities where those folks land. A previous Redfin study found that the rate of inflation was higher in markets popular with out-of-towner transplants, such as Atlanta, Phoenix and Tampa, Fla.
“A person moving from New York City to Atlanta will probably enjoy lower housing costs in their new hometown,” Redfin deputy chief economist Taylor Marr said in the previous report. “That means they’re able to spend more on other things, which in turn means local businesses can charge higher prices.”