Redfin: Affordable Inland Metros Drew Migrants from High-Cost Coastal Markets

Mike Sorohan

February 13, 2018

Redfin, Seattle, said migration patterns in the fourth quarter saw people in expensive, high-tax coastal markets such as San Francisco, New York and Los Angeles searched for homes in more affordable metros with lower taxes such as Sacramento, Phoenix, Las Vegas and Nashville.

The company's quarterly Migration Report said of the 22 percent of home searchers who looked to move to another metro area, several key trends emerged:

--San Francisco, New York, Los Angeles, Washington, D.C. and Chicago posted the highest net outflows.

--Fast-growing, mid-tier metros in the Sunbelt, including Phoenix and Las Vegas, and the South, including Atlanta and Nashville, had the highest net inflows.

--Seattle saw more users looking to leave than to move to the area for the first time since we began tracking these data. Seattle showed a negative net outflow in the fourth quarter, a first since Redfin began tracking migration patterns in 2017. Among local users who were looking to leave, 10.6 percent were eyeing Los Angeles, followed by Bellingham, Wash., Portland and Phoenix, each of which captured at least 8 percent of Seattleites looking to leave.

"People leaving coastal hubs in search of affordability has been a consistent trend for the last five years," said Redfin chief economist Nela Richardson. "Late last year there was a twist. Many of the popular migration paths that we saw users exploring yielded tax benefits along with increased affordability."

Redfin expects that in 2018, this migration pattern will intensify as tax reform becomes a reality and more people choose to relocate in search of a lower cost of living. By comparing annual property, state and local tax burdens from the 2016 Tax Rates and Tax Burdens in the District of Columbia, Redfin said it can estimate what a move from one metro to another might entail from a tax perspective.

For example, Redfin said 18.2 percent of all searches for homes in Las Vegas in the fourth quarter came from Los Angeles. A family earning $150,000 who made this move could save $7,785 in taxes and would likely pay less for a similar home, given that the typical home in Las Vegas costs about $333,000 less than in Los Angeles. Similarly, the 9 percent of New Yorkers looking to leave who considered Atlanta might save $5,809 in taxes and benefit from a $161,000 lower median home sale price.

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