In a surprising turn of events, Austin, Texas, known for its popularity among migrants, is witnessing a significant shift as homebuyers are now looking to leave the city. The soaring housing costs and the return of some recent transplants to their hometowns have contributed to this change. On the flip side, cities like Sacramento, Las Vegas, and Orlando have emerged as the top choices for homebuyers, despite increasing climate-related risks.
Austin Housing Market is Losing Homebuyers to Other Cities for First Time on Record
During the third quarter, there was an unprecedented occurrence in Austin: more homebuyers sought to leave the city than to move in, marking the first time on record that Austin experienced a net outflow of residents. The number of Austin-based users on Redfin searching for homes outside the metro area has more than doubled in the past year.
Data and Methodology
The data in this report is derived from the searches of approximately two million Redfin.com users who viewed for-sale homes online across more than 100 metro areas from July 2023 to September 2023, with records dating back to 2017.
Factors Behind Austin's Decline
Austin's recent decline in popularity among relocating homebuyers can be attributed to several factors:
- Rising Home Prices: By mid-2022, Austin's home prices had increased by more than 75% compared to pre-pandemic levels. While prices have dipped from their peak, homes remain significantly more expensive than before the pandemic.
- Soaring Mortgage Payments: Monthly mortgage payments have doubled since before the pandemic, mainly due to surging mortgage rates. As of now, the typical monthly payment for Austin's median-priced home is $3,890, nearly double what it was in 2019.
- Return of Remote Workers: Some homebuyers who moved to Austin for remote work opportunities are returning to their home cities as they are called back to the office. Others are leaving Austin in search of job opportunities in major urban centers.
Positive Outlook for Austin Locals
The slowing migration trend is advantageous for locals in Austin looking to buy homes. The median home price in Austin has dropped about 5% year over year, representing the most significant decline in the U.S. It is also down nearly 20% from its pandemic peak. Austin residents are now in a better position to secure deals on houses, even with high mortgage rates, as competition has decreased.
Top Destinations for Homebuyers Leaving Austin
Most homebuyers leaving Austin are opting to move to other places in Texas, with San Antonio and Corpus Christi being two of the most popular destinations. Denver is another favored destination for those relocating from Austin.
Nationwide, the share of homebuyers relocating to different metro areas remains high. Approximately 25.9% of homebuyers sought to move to a different part of the country in the third quarter, indicating a sustained interest in migration.
While there has been a 9% decrease in Redfin.com users looking to move away from their home metro compared to a year ago, there has been a more significant 17% decrease in users searching within their home metro. This suggests that out-of-town home searches are holding up better than in-town searches.
Many Americans are relocating in pursuit of affordability, with nine of the ten most popular migration destinations offering lower home prices than the places from which buyers are moving.
Homebuyers Embrace Affordable but Climate-Risky Destinations
In the third quarter, Sacramento, Las Vegas, and Orlando emerged as the most popular destinations for relocating homebuyers. These cities are characterized by net inflow, indicating that more people are looking to move in than leave. Notably, many of these destinations face increasing climate risks, yet their affordability makes them appealing to homebuyers.
In conclusion, Austin's status as a migration hotspot is evolving as housing costs rise and other factors come into play. Homebuyers are now considering alternative cities for their real estate needs, with affordability and climate risk influencing their choices. This shift has implications for both Austin's real estate market and the broader trends in nationwide migration.