The nation’s mortgage rates continue to hover near historical lows, which has spurred an increase in purchasing demand.
However, as more home buyers enter the market, America’s lack of housing inventory has begun to put pressure on home prices nationwide.
Redfin’s latest migration report indicates that in the third quarter of 2019, more and more Americans expressed interest in relocating to housing markets that offered them more affordable housing.
This was seen in Sacramento, where 43.4% of home searches made on Redfin’s site came from homebuyers living outside of its housing market. This translates to an inflow of 6,896 non-local homebuyers, according to Redfin.
In this metro, the median home price sits at $415,000, while this may seem expensive, it’s one of the most affordable markets for homebuyers living in northern California.
But as more homebuyers head to the relatively affordable market, Daryl Fairweather, Redfin’s chief economist, warns there are now fewer homes available for sale.
“In San Francisco, for example, inventory has been rising because there aren’t many San Franciscans who can afford the high prices,” Fairweather said. “San Franciscans are moving to Sacramento where homes are much more affordable, and that, combined with a lack of new listings, has caused inventory to decline in Sacramento.”
Redfin’s data also reveals a similar pattern in Boston, which has become the nation’s most desired housing market for relocation.
In Boston, 17% of homebuyers searching for a new home were looking from a different housing market, which is up by 12% and 14.1% from Q3 of 2018 and Q2 of 2019, respectively. This also represents an inflow of nearly 7,000 non-local homebuyers.
“There is a sense here in New York that the sky has been falling for our housing market all year,” said Nick Boniakowski, Redfin’s New York market manager. “People fleeing NYC aren’t looking for a rural life, they are fleeing the high costs.”
Data from The Greater Boston Housing Report Card, a report that details housing trends in the Boston area, indicates housing inventory in the market has fallen, which threatens to raise home prices in the metro.
“While median home prices have returned to pre-recession levels, transaction volume has not. In all five Greater Boston counties, the number of home sales in 2018 was more similar to 1988 volume than to the years just prior to the Great Recession,” The report states. “This lower level of inventory is a significant contributor to the rapid acceleration in median home prices.”
According to the report, with a growing population, a lack of supply will make home price stability in Boston incredibly difficult to achieve in the years to come.
NOTE: Redfin’s data is based on its affordability dashboard, which allows users to compare affordability among different parts of the U.S.
