Yahoo Finance Top Ten List Of Cities Where Americans Are Moving: Shows If You Build It Affordably, They Will Come
A recent report from Redfin, showing Top-10 lists of the cities Americans are moving into and out of, speaks volumes about America's real estate market. A combination of high housing prices and a lack of inventory is driving Americans out of big cities in droves. When they move, they are avoiding many of America's major population centers in favor of what used to be midmarket cities that have now become mainstream.
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Comparing Redfin's list of the top 10 cities people are moving from with the median home prices in those cities reveals a brutal truth: Americans are increasingly turning their backs on the metropolitan areas that have historically powered the country's economy. They simply don't believe the prices are ever coming down and are probably right. Take seven of the top 10 cities on Redfin's move-out list and their median home prices:
Los Angeles, California: $1,050,000 — 10.9% increase over last year
New York, New York: $810,000 — 0.061% decrease from last year
San Francisco, California: $1,400,000 — 0.02% increase over last year
Seattle, Washington: $885,000 — 5.9% increase over last year
Washington, D.C.: $697,000 — 3.3% increase over last year
Chicago, Illinois: $367,000 — 7.9% increase over last year
Boston, Massachusetts: $800,000 — 0.06% increase over last year
Philadelphia, Pennsylvania: $270,000 — 1.7% increase over last year
Except for New York City, which only has a 0.061% drop in prices, all the median home prices are trending the wrong way for anyone who intends to wait out the market. Factor in a seven percent mortgage and LA, NY, SF, Seattle, D.C., and Boston are essentially off-limits for any household with an annual income that doesn't exceed $350,000.
Redfin estimates that the median home value in America is $439,716, a 5% increase over last year's median home price. That median value number jumps significantly in major cities like New York City or Los Angeles, where buyers can expect to pay prices that approach and often exceed $1,000,000. While New York and Los Angeles have long been infamous for high home prices, the rest of America's big cities are no bargain either.
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Home prices in most of America's largest cities are climbing so quickly that only a tectonic market correction or a massive influx of new inventory would make housing "affordable" again. Considering most of the metro areas and suburbs in the Northeast and on the Pacific coast are built out to near-maximum capacity, the influx of inventory is unlikely. That will probably keep demand so high that it makes a massive market correction equally unlikely.
Currently, an overwhelming majority of America's new housing inventory is being built between Phoenix and Florida. That might explain why Redfin's Top 10 cities Americans are moving to are almost the polar opposite of the Top 10 cities Americans are leaving. Seven of these top 10 cities are compared below along with their median home value according to Redfin:
Sacramento, California: $513,000 — 3.7% increase over last year
Phoenix, Arizona: $461,000 — 5.6% increase over last year
Sarasota, Florida: $569,000 — 9.4% increase over last year
Cape Coral, Florida: $390,000 — 5.8% decrease from last year
Las Vegas, Nevada: $440,000 — 7.3% increase over last year
Orlando, Florida: $407,000 — 8.7% increase over last year
Myrtle Beach, South Carolina: $207,000 — 11.1% decrease from last year
Sacramento is the only non-sunbelt city on the list, but it's worth noting that California's state capital is just a few hours' drive from the Bay Area. That made it the first destination for Bay Area residents seeking refuge from high prices. With that said, its median home price is almost $900,000 less than San Francisco's. The remaining Sunbelt cities on the list are much more affordable.
A big part of that affordability is that these cities have units available, and thousands more units are scheduled to come online in the next few years. It shows that despite all its complications, real estate still operates under a relatively simple truth: If you build it, and they can afford it, they will come.
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