Location Ventures CEO Rishi Kapoor was recently featured in GoBankingRates article titled “Homebuyers Are Leaving These 5 Big Cities, Relocating to These 5 Big Cities – Experts Weight In”.
From the article:
The pandemic has people itching to move. Of course, there is always some percentage of people who are looking to relocate anyway, but a recent report from Redfin shows the share of homebuyers searching for a new place to call home is up substantially since COVID-19 first turned our world upside down.
As of January 2022, a record 32.4% of Redfin.com users nationwide looked to move to a different metro area — significantly up from 25.2% in Q2 2019, and slightly up from the previous peak of 31.5% in the first quarter of 2021. While the current percentage is notably higher than before the pandemic, the question is exactly what influence the pandemic has had on the increase. While it would seem that remote work policies would play a big part, expert input helps us bring further context to this rising trend. Let’s explore the situation.
So Long, San Fran, LA, NYC, Seattle and D.C. — Hello Miami, Phoenix, Tampa, Sacramento and Vegas!
According to the Redfin report, San Francisco, Los Angeles, New York, Seattle and Washington, D.C. were the top metro areas homebuyers looked to leave in January, which was unchanged from the fourth quarter of 2021. That’s based on net outflow, a measure of how many more Redfin.com home searchers looked to leave a city than move in.
As for where homebuyers are looking to move, Miami was the most popular destination of all the major U.S. metros, unchanged from the third and fourth quarters of 2021. Miami was followed by Phoenix, Tampa, Sacramento and Las Vegas.
Expert Analysis
Here, we’ll take a look at why people are leaving the five major metros and flocking to the five other ones, with home prices, climate and other factors coming into play.
Cost Plays a Big Role
Throughout the pandemic, we have seen people move from expensive cities such as San Francisco and New York to cheaper cities like Las Vegas and Phoenix. As more data becomes available, it appears the pandemic may have accelerated the already existing trend of people leaving costly metros. In other words, it didn’t necessarily create a brand new phenomenon.
Nevertheless, cost matters, and that is perhaps more important than ever in light of COVID. “This high cost of living doubtlessly pushes some people to seek out less expensive parts of the country,” says Jacob Channel, senior economic analyst at LendingTree. “That’s not to say that places like Miami or Sacramento are incredibly cheap, but when compared to somewhere like LA or San Francisco, they appear significantly more affordable.”
Policy Also Matters
Although relocating is not usually a temporary decision, it appears policies around COVID-19 have factored into the decision for at least some homebuyers. Every buyer has their own calculations to make, and policies that are a pro for some may be a con for others.
“Among those who said the pandemic responses of their previous area impacted their decision of where to live, 26% sought an area with less restrictive pandemic-related policies, including mask mandate bans, and a lack of vaccine requirements,” says Vanessa Famulener, president of HomeLight Homes.
However, there is a flip side to this, as Famulener points out. “On the flip side, 19% of buyers wanted to move to an area where a higher percentage of the residents take action to mitigate the pandemic (e.g. voluntary mask wearing, social distancing, etc.).”
Climate Change Is a Growing Concern
For many years, climate change wasn’t a serious concern for homebuyers, which meant people didn’t think twice about cities near the water with tropical climates. However, as the impacts of climate change are becoming increasingly evident, climate change is becoming a real factor in where people choose to live. “Climate change continues to impact every aspect of our lives, and in the case of our homes, extreme weather has proven to be unpredictable (and detrimental) over the last decade or so,” says Brad Wills, director of strategic customers & programs at Schneider Electric. “Those who live in areas prone to climate disasters (think flooding, tornadoes, heavy snowfall) are flocking to locations with a higher price tag to escape the harmful effects that extreme weather causes to their homes and livelihood,” Wills says.
The idea that people would opt for more expensive areas to escape climate change impacts is certainly a newer phenomenon, but it also makes sense. After all, only 27% of Americans have flood insurance, according to the Insurance Information Institute. Hence, moving somewhere that is less prone to flooding can save homebuyers money in the long run.
People Are Staying Closer to Home Than Expected
Many people may be moving to cities like Sacramento to save money, but in most cases, they aren’t moving there from New York. In fact, the majority of people moving to Sacramento are moving from San Francisco. Meanwhile, people moving to Tampa are most often coming from Orlando.
“Something else that’s interesting is that a considerable amount of those moving aren’t packing up and making the trek to the opposite side of the country,” says Hamza Ibrahim, founder and CEO of REI University. “In most cases, they’re actually moving either to the suburbs of the city they were in, or to a more affordable urban area that’s still in the same region.”
More Than Anything, Quality of Life Matters
One of the recurring themes throughout the pandemic, at least in terms of what we kept hearing, is how everything would change forever. And some things did change significantly, such as more companies embracing remote work. Anecdotally, some large employers are offering to reimburse employees up to several thousand dollars for home office equipment. And, indeed, some people who can work remotely have moved to cheaper areas to reduce their costs.
“However, much of this ‘Great Relocation’ is also a flight to quality of life,” says Rishi Kapoor, CEO of Location Ventures. “Year-round access to the beach, water, and outdoor space is a significant draw for people, especially as South Florida’s culinary, shopping and entertainment scene is now rivaling major metros like New York City and L.A.”
Read more from the GoBankingRates article HERE
