Source: Redfin
Out-of-towners have bigger budgets than locals in 31 of the 34 cities included in this analysis, and they’re driving up home prices.
The average housing budget for out-of-towners moving to Nashville in 2020 was $719,500, 48% higher than the $485,500 average budget for local buyers.
That’s according to an analysis of average maximum list-price filters for homes set by Redfin.com users in their saved searches. Nashville’s is the biggest budget difference between out-of-town and local homebuyers of all the cities included in this analysis. The analysis includes cities in the U.S. with at least 3,000 Redfin.com home searchers from inside the metro and 3,000 from outside the metro last year.
Next come Atlanta, where out-of-towners had an average budget of $698,000, 33% higher than the local budget, and Austin, where the average out-of-towner had an $852,500 budget, 32% higher than locals. Out-of-towners have higher budgets than locals in all but three of the 34 cities included in this analysis.
“Many homebuyers are now able to widen their searches to parts of the country that weren’t options when they were tied to offices in expensive cities, and the consequences for popular destinations will be numerous,” said Redfin chief economist Daryl Fairweather. “That’s great news for remote workers because their San Francisco salary can buy a lot more in Nashville or Austin than the Bay Area. And for locals, the influx of wealthy homebuyers is both good news and bad news. Homeowners will see the value of their homes rise, but first-time homebuyers will face tougher competition from out-of-towners with big budgets. Local economies will change as well, with people like construction workers, plumbers, childcare workers and landscapers seeing increased demand and increased prices for their services–but that would mean higher prices for locals as well.”
The Nashville, Atlanta and Austin metros are all perennially on the top 10 list of most popular destinations for Redfin.com users moving from one metro area to another, and the number of people looking to move to each place increased by more than 40% year over year in late 2020. Homes in those metros are relatively affordable, though prices have been rising over the last several years. The typical home in Nashville sold for $330,000 in December, up 5.1% from $314,000 in December 2019. The median home-sale price in Atlanta was $285,000 in December (+13.7% YoY from $250,000), and in Austin it was $370,000 (+15.2% YoY from $321,000).
Californians are driving up home prices in Nashville and Austin
Nashville Redfin agent Mike Estes said he works with people moving in from Los Angeles, New York and Chicago on a weekly basis, and the number of wealthy out-of-towners has increased over the last year as remote work exacerbates migration.
“I’ve lived in Nashville for 14 years and the joke is that $500,000 to $700,000 is the new $300,000 to $500,000. But those who have lived in the area for many years typically can’t afford to spend $500,000 to $700,000 on a home, and they often move into the suburbs or even farther out to find a home within their budget,” Estes said. “Local homeowners are pleased with the increase in their property values, but they aren’t always able to capitalize on it because they can’t afford to buy in the same hot market. Meanwhile, people moving in from Los Angeles tend to think $700,000 is inexpensive, and they’re shocked they can afford a 3,000-square-foot home with beautiful finishes for that price.”
Austin was the most common destination for Redfin.com users looking to move to a different metro at the end of 2020, the first time the Texas capital topped the list. Nearly 150% more people looked to move into Austin in the fourth quarter of 2020 than the same time period a year before.
“My nickname for Austin is Texa-fornia because so many people are moving in from California,” said Sabrina Archolecas, senior asset manager for the Texas branch of RedfinNow, Redfin’s iBuying business. “Buyers’ agents are taking lawn chairs to showings because lines to get into properties are so long. People moving in from other parts of the country are making the market incredibly competitive and driving up prices like agents have never seen. One recent four-bedroom, 3,200-square-foot listing in Austin had 16 offers in one weekend; the list price was $575,000 and it sold for $638,000.”
The Bay Area is the only place where locals have higher budgets than out-of-towners
Locals had higher budgets than migrants in just three of the 34 cities included in this analysis: San Francisco, San Jose and Fremont, CA (a city in the Oakland metro), all cities where migrants and locals alike have homebuying budgets well over $1 million. The average budget for a local in San Francisco was $1.76 million in 2020, 4.1% higher than the $1.69 million average budget for out-of-towners.
The fact that locals had slightly higher budgets than migrants in those three cities is likely because the Bay Area has the highest median income in the U.S., meaning Bay Area locals can afford higher-priced homes than people moving in from other parts of the country.