Thousands of people have packed up and moved to Phoenix in recent years, whether in search of cheaper homes or just an ample dose of sunshine. With the rise of remote working offering homebuyers some flexibility, it’s tempting to fantasize about relocation plans to cheaper properties in cities such as Phoenix.
This week, Redfin released new research of the top 10 U.S. metros that out-of-town buyers are looking to relocate to based on net inflow and outflow data of Redfin.com users. As per the company’s findings, Phoenix – previously one of the three most popular destinations that non-local buyers were looking to relocate to – slipped from its months-long, top-three ranking to sixth place in July.
Phoenix recorded a net inflow of 6,510 users in July 2021, a measurement of how many more Redfin.com users looked to move into the city versus leaving. Twelve months later, Phoenix’s net inflow shrank to 4,853 users, a more than 1,600-user difference.
It’s not sweltering temperatures or the threat of monsoons that are putting off buyers from making the move to Phoenix. Redfin pointed to growing home prices as one of the factors that are causing a slowdown in relocation plans to Arizona’s capital.
“And after many months as one of the three most popular destinations, Phoenix fell to number 6 in July, with a sizeable decline in out-of-town homebuyers looking to move there,” said the report from Redfin data journalist Dana Anderson. “That’s partly because Phoenix home prices rose so much during the pandemic, increasing 20% year over year to $485,000 in June, well above the national median of $428,000.”
This trend is not unique to Phoenix. Miami and Sacramento also noted a drop in net inflow users between July 2021 and 2022, with the number of non-local users in each city falling to 6,704 and 6,550 people last month.
The portion of users located outside of Phoenix who are searching for homes in the city, however, is mostly unchanged on a yearly basis. In July 2022, 36.9% of Redfin Phoenix searchers were based outside of the metropolitan area, just 0.3% more than the levels recorded in July 2021 (36.6%).
The majority of those looking to set roots down in Phoenix are based in one of the most expensive housing markets in the country: Los Angeles. Considering Arizona’s proximity to California and the major real estate savings that can be recouped from relocation, it would make sense why some Angelenos would want to become Phoenicians.
According to Redfin, more homebuyers left the Bay Area and Los Angeles in July than any other metro, which is unchanged from the first half of the year. This trend is based on net outflow, a measure of how many more Redfin.com users looked to leave a metro than move into it. In July 2021, Los Angeles reported a net outflow of 21,944 Redfin users, a number that has grown to 25,017 users as of July 2022.
“It’s typical that homebuyers look to move out of expensive job centers, and the trend has generally intensified during the pandemic as white-collar employees in those places switch to remote work,” noted the Redfin report.
On a national scale, U.S. homebuyers are not totally putting their relocation plans on hold, even with doom-and-gloom headlines out there about the economy.
As interest rates climb and remote working continues to enable Americans to move into cheaper cities, users are still considering the idea of relocation. A record 33.7% of Redfin.com users nationwide looked to move from one metro to another last month, up from 32.6% in Q2-2022 and higher than 26% of users pre-pandemic. Even as recession fears swirl and mortgage rates jump up, the percentage of homebuyers looking to relocate is higher than ever.
“That’s because high home prices and mortgage rates, combined with permanent remote work, are motivating buyers to move from expensive parts of the country to more affordable areas,” explained the Redfin report.