People moving to some of the hottest U.S. real estate markets have nearly 30% more to spend on homes than locals, highlighting pressures in the country’s most competitive cities for housing.
The trend toward remote work has allowed many Americans to sell their homes in pricier cities and move to cheaper ones, giving them a bigger budget than locals, according to a new report from listing site Redfin Corp.
New arrivals in Nashville, Tennessee, had $736,868 to spend on homes in 2021, 28.5% higher than the $573,382 average budget for locals, Redfin said. Philadelphia followed with an average newcomer budget of $559,215, 28.4% higher than local budgets of $435,609. New York rounded out the top three with an average budget of $1.2 million for out-of-town buyers, a 26.5% increase over the local average of $957,506.
“People moving from the West Coast will pay way over asking price without batting an eye. In their eyes, they’re getting a deal,” Hope Geyer, a Redfin agent in Nashville, said in a statement. “It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one.”
Locals had more money to spend on a home than newcomers in just seven of the 49 cities surveyed, four of which are in the Bay Area of California: Fremont, Pleasanton, San Jose and San Francisco. Fremont locals had $1.56 million to spend on a house, compared to $1.47 million for new arrivals, the widest margin in favor of locals among the cities studied by Redfin.
Relatively cheap mortgage rates and a proliferation of remote-working opportunities in the wake of the Covid-19 pandemic have boosted demand for homes in smaller cities. Bidding wars are popping up across the U.S. housing market, particularly for higher-end real estate, as buyers compete for a shrinking number of available homes.
This article was provided by Bloomberg News.