Gateway markets in New York and California, unsurprisingly, saw the biggest outmigration last year, during the height of the Covid-19 pandemic. But which areas gained ground?
A recent report by Irvine, California-based analytics firm CoreLogic Inc. details which markets saw the biggest inbound population activity in 2020 as well as metros with the greatest outmigration, based on homebuying. CoreLogic’s rankings were determined by its loan-application data. The data points to Texas and North Carolina as two of the big gainers.
And 2020 was a hot year for homebuying. Home-loan applications for purchases were up 11% compared to 2019, according to CoreLogic.
For each incoming home-purchase application in New York, there were almost six potential homebuyers moving out of New York last year, according to CoreLogic.
“The pandemic created a perfect recipe for consistently employed Americans,” said Archana Pradhan, CoreLogic’s principal economist, in a statement. “If it had been any other mix of events — for example, if low housing inventory was coupled with job inflexibility — we wouldn’t have had such a large group of homebuying consumers feeling empowered to make bold moves in their living situations.”
The influx of residents moving from larger, more expensive metro areas has, perhaps, contributed to the affordability crunch in fast-growing metro areas.
Texas cities have been the recipient of what’s frequently referred to as a corporate exodus out of California, even pre-Covid-19. Companies like McKesson Corp. and Charles Schwab Corp. have moved their headquarters out of California to Texas. Many cite a lower tax climate and overall affordability among the reasons for relocating.
Like many trends, the pandemic only accelerated that migration.
Marvin Jolly, chairman of Austin-based Texas Realtors, said across the state, buyers are coming in from places like California, Chicago and Northeastern cities. A recent Texas Realtors report found the highest number of new Texans from other states came from California and Florida.
“The affordability in Texas does create a big draw for those buyers,” Jolly said. “Those buyers are coming from places where the median price is 50% to 75% higher than markets in Texas, so they’re very comfortable with pricing in Texas.”
The average median home price statewide in Texas increased $112,200 in the past 10 years, according to a new Texas Realtors report. The median home price of $259,188 at the end of 2020 might be considerable for longtime Texas residents, but not so much for inbound homebuyers coming from more expensive metro areas.
Jolly said people moving to Texas from California are also accustomed to what he called a very volatile market – something Texas has not historically had.
Frequently, real estate agents today have to educate homebuyers on the current forces in the market — let’s not forget high-population growth markets are also hot places for investors. That frequently means buyers getting comfortable with a higher offer than what’s historically been the norm, Jolly said.
“It’s a very, very big mindset shift when you say you have to pay 10% to 15% over the appraised value for a house,” he continued.
North Carolina is another state that’s seen population growth — including from the Northeast — accelerate since the pandemic.
Kelly Marks, current president of NC Realtors, said North Carolina is also a “halfback” state for retirees, squarely in between New York and Florida. For buyers coming from the North, there’s frequently no sticker shock with home prices, Marks continued.
Marks said educating clients on realistic market expectations, because of the influx of buyers from higher-priced metros and numerous other factors, is important.
Looking ahead, smaller, tertiary markets could be the next places to see population growth, especially as secondary metros face greater affordability crunches.
CoreLogic noted 57% of people who moved to Boise, Idaho, last year came from California. The median sales price in Boise was $375,000 in 2020, compared to $1.3 million in San Francisco and $600,000 in Seattle.