If you’re thinking about moving to a new location, you’re not alone. And due to increase in remote work, more people are choosing where to live based on a variety of factors besides their commute. Today’s homebuyers, particularly first-time buyers, with flexibility in their work location can pick an area or community based on lifestyle, climate, amenities, and affordability. Repeat buyers, who often enjoy the benefit of appreciation in their property that provides them with a boost into their next property, may also be ready to try living in a new location or want to move up in their community.
Where Buyers Are Relocating
A recent report by Redfin real estate brokerage found that a record 25 percent of homebuyers were looking to relocate to a new metro area at the end of 2022, up from 21 percent at the end of 2021. Redfin’s researchers found that the prime driver of relocation was the search for affordability because of high housing costs. Before the pandemic, about 18 percent of buyers looked outside of their current housing market, according to Redfin.
In addition to a search for more affordability that has led many people away from high-cost coastal markets, buyers are also looking for a sunny climate.
Sun Belt cities dominate the list of most popular markets for relocating buyers, with Sacramento and Las Vegas occupying the top slots, followed by Miami, Tampa, and Phoenix, according to Redfin. Rounding out the top 10 hottest markets for relocation buyers are Dallas, Cape Coral and Sarasota in Florida, Houston, and Orlando. All of these top destinations are known for their warm climates. In eight of the top 10 destinations, the typical home is less expensive in that market than the typical home in the market where these relocation buyers currently live.
For example, the median sale price in Sacramento was $540,000 in the fourth quarter of 2022, compared to a median sale price of $1.4 million in San Francisco, the top market of origin for relocation buyers in Sacramento. Buyers from Los Angeles are the largest group of people relocating to Las Vegas, Phoenix, and Dallas. People from New York City are the largest pool of relocating homebuyers in Miami, Tampa, Houston, and Orlando. Chicago buyers lead the pack of relocation buyers in Cape Coral and Sarasota.
Housing Markets With Newly Built Homes
While there’s not an exact correlation between the fastest-growing markets for relocation buyers, many of the cities where people want to move are also a focus for home builders. The top 10 cities with the highest percentage of newly built homes were all in the Sun Belt in mid-2022, according to another study by Redfin of building permits in the first quarter of 2022. Overall, 49 of 53 metro areas with more than 1 million people saw building permits increase early in 2022. Building permits are government authorizations for builders to start construction on homes or communities.
Austin led the way with the highest per capita building permits (31.1 per 10,000 people). Other cities with high levels of building permits include Raleigh (30.7), Jacksonville (29.2), Nashville (26.6), and Charlotte (22.9).
Those top five markets for newly built homes were followed by several on the list of markets that continue to attract relocation buyers: Phoenix (22.7), Houston (22.4), Orlando (20.3), Dallas (18.5), and Las Vegas (17.2).
Markets to Watch in 2023
Whether you’re looking for a new place to establish your home or want to buy an investment property, expert analysis of property markets can guide your decision. The National Association of Realtors (NAR) report “On the Horizon: Markets to Watch in 2023” identifies locations where the organization thinks the housing market will outperform other areas based on multiple factors such as:
- Affordability. The combination of rising prices and higher mortgage rates is one of the main reasons for the cooldown in the housing market in 2022. NAR’s research identified markets where more people earning an average income could afford a median-priced house. Researchers also evaluated how many renters could afford to buy in each market.
- Job growth. Strong job growth is a prime indicator of a healthy housing market.
- Faster growth of information industry jobs. Jobs in that field typically pay 50 percent more than the average salary. Locations with strong job growth in the information industry are expected to grow faster in general.
- Migration and population gains. Areas with more people moving in and higher local population growth lead to housing demand.
- Smaller housing shortage. Markets with faster than average growth in inventory and a better match between supply and demand will give buyers more options.
Here’s NAR’s list of markets to watch in 2023, all in Sun Belt cities in Texas and the South:
- Atlanta, which continues to see substantial migration and job growth yet still has relatively affordable housing compared to the rest of the country.
- Raleigh, which is less affordable than some other areas, has robust job growth, and sees a single-family permit issued for every three new jobs.
- Dallas-Fort Worth, an emerging tech area with a variety of affordable housing options.
- Fayetteville, Arkansas, another emerging tech hub with affordable housing.
- Greenville, South Carolina, which has strong job growth, especially in the tech industry, and saw a single-family permit issued for every four new jobs in 2022.
- Charleston, which has strong migration because of job growth but is a little less affordable than some other markets on the list.
- Huntsville, Alabama, which has growing job opportunities as the most affordable metro area on the list.
- Jacksonville, which is one of the more affordable metro areas in Florida, has a strong job market, and sees a single-family home permit issued for every two new jobs.
- San Antonio, which, as one of the more affordable parts of Texas, is experiencing an influx of tech workers.
- Knoxville, Tennessee, which has housing that is about 10 percent more affordable than the national average and has a growing job market.
Great Towns for First-Time Buyers
Realtor.com takes a more granular approach with its research on top markets for 2023, looking at specific towns within a metro area and focusing on first-time buyers rather than all buyers. The qualities that make a place ideal for this pool of buyers include affordability, livability, and opportunities for younger buyers to get into the housing market. These towns have strong job markets, short commutes, plenty of restaurants and bars, a younger population, affordability, and more homes available for buyers, according to Realtor.com.
The hottest towns for first-time buyers in 2023 include:
- Portsmouth, Virginia, in the Virginia Beach-Norfolk-Newport News area
- DeForest, Wisconsin, in the Madison area
- Windsor Locks, Connecticut, in the Hartford area
- Gloucester City, New Jersey, in the Philadelphia-Camden-Wilmington area
- Moore, Oklahoma, in the Oklahoma City area
- Magna, Utah, in the Salt Lake City area
- Eggertsville, New York, in the Buffalo area
- Watervliet, New York, in the Albany-Schenectady area
- Mattydale, New York, in the Syracuse area
- Somersworth, New Hampshire, in the Boston area
While there’s some crossover on these lists of hot markets rather than complete correlation, the pattern is clear: Buyers want affordable housing, a warm climate, and plenty of opportunities for work.
Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades.