Redfin Report: Migration to Low-Tax Metros is Accelerating as More People Looked to Leave Expensive Coastal Areas in the Second Quarter

Taxes are three-times lower in the top-10 migration destinations than in the 10 places people are most commonly leaving

Seattle, WA – Sept. 12, 2018 (PRNewswire) (NASDAQ: RDFN) In the second quarter of 2018 people in expensive, high-tax coastal markets including San Francisco, New York, Los Angeles and Washington, D.C. searched for homes in metros like Phoenix, Las Vegas and Miami, where taxes are lower and housing is more affordable. This is according to the latest Migration Report by Redfin (www.redfin.com), the next-generation real estate brokerage. The analysis is based on a sample of more than 1 million Redfin.com users who searched for homes across 80 metro areas from April to June.

Nationally, 24 percent of Redfin.com home searchers looked to move to another metro area in the second quarter, compared to 21 percent during the same period last year. According to Census survey data, housing-related reasons are the primary reason households relocate to another county, which in today’s market typically means affordability.

“With home prices reaching new heights in many metro areas, it’s no surprise people are continuing to move away from expensive metros in search of homeownership,” said Taylor Marr, Redfin senior economist. “Last year’s tax reform poured fuel on the fire. By capping mortgage interest and state and local tax deductions, there is an even greater incentive for homebuyers to consider moving to a lower-tax state.”

The average local tax burden—a relative measure of a county’s average sales, income, and property tax rates—was three-times lower in the top-10 migration destinations than in the 10 places people were most commonly leaving last quarter.

While taxes have long been part of the equation of where to live, tax reform passed in late 2017 has further heightened this consideration for homebuyers. According to a Redfin-commissioned survey in May 2018, which included responses from 1,300 people who had bought a home in the past year:

  • 8% of people said they shifted their search to a state with lower taxes due to the new tax law.
  • 9% said they shifted their search to nearby cities with lower taxes.
  • 10% said they bought a less expensive home because of the decreased benefits on high-priced homes.
  • 10% bought a more expensive home because their after-tax income grew.

“Now that homeowners and prospective buyers have had some time to understand how the new tax laws are affecting their finances, we are starting to see an impact on migration trends,” said Marr.

Moving Out – Metros with the Highest Net Outflow of Redfin Users

San Francisco, New York, Los Angeles, Washington, D.C. and Chicago posted the highest net outflows in the second quarter. Net outflow is defined as the number of people looking to leave the metro minus the number of people looking to move to the metro. A net outflow means there are more people looking to leave than people looking to move in, while a net inflow means more people are looking to move in than leave. These metros have consistently ranked as the highest net outflow metro areas since Redfin began tracking quarterly migration in early 2017. These trends appear to be accelerating as the share of residents looking to leave is rising.

Of all Bay Area residents using Redfin, 22 percent were searching for homes in another metro, up from 19 percent during the same time period a year earlier. Of New Yorkers, 36 percent looked to leave compared to 35 percent last year. Of Los Angelenos, 16 percent looked to leave, compared to 15 percent last year.

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* Combined statistical areas with at least 500 users in Q2 2018
† Among the one million users sampled for this analysis only

Denver: Reaching its Peak

Last quarter, we hypothesized that Denver had reached its peak in terms of migration, noting that the metro posted a net outflow of Redfin users for the first time. That trend continued in the second quarter. Of all Denverites using Redfin, 23 percent were searching for homes in another metro, up from 18 percent during the same time period a year earlier. Among the Denverites who were searching elsewhere, approximately 20 percent were looking at more affordable metros within the state: Colorado Springs and Fort Collins. The median list price in Colorado Springs and Fort Collins was $305,000 and $401,000 respectively, compared to Denver’s median list price of $406,000 in July.

Seattle: One to Watch

Seattle is an interesting case. In the first three quarters of 2017, Seattle drew new residents. In Q4 2017 and Q1 2018 that trend reversed and Seattle joined the list of metro areas with more people looking to leave than move in. In the second quarter, Seattle reversed course again with a net inflow of residents. The fact that Seattle residents don’t pay state income taxes may be one reason Seattle had a net inflow, despite its staggering home price growth, up 58 percent in the past five years. Another reason is the thriving tech sector, with Amazon, Google, Facebook and others continuing to grow and attract new hires to the region. We’ll continue following Seattle migration trends in future quarters to understand whether the metro is topping out on growth.

Moving In – Metros with the Highest Net Outflow of Redfin Users

The places attracting the most people are mostly sun-scorched metros with relatively affordable homes and lower tax burdens, including Phoenix, Las Vegas and Miami. Below are the 10 metros that are the most likely to receive big inflows of new residents in the coming year from expensive coastal markets. With these new residents, economic growth and rising home prices will likely follow.

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* Combined statistical areas with at least 500 users in Q2 2018
† Negative values indicate a net outflow; among the one million users sampled for this analysis only

Phoenix and Las Vegas: Affordable Desert Oases

As in the first quarter, Phoenix again had the highest net inflow in the analysis. Thirty-four percent of home searchers in Phoenix in the second quarter were from elsewhere, up from 31 percent during the same period last year. The top origin of Phoenix migrants was Los Angeles (25% of inbound searches), followed by Seattle (14%), Chicago (8%), the Bay Area (8%) and New York (5%).

Phoenix is also much more affordable, with a median home list price of $275,000 in July, compared to $410,000 in Denver and $565,000 in Seattle.

Las Vegas, another low-tax haven, had the highest share of non-local searches. Forty-one percent of the people searching for homes in Las Vegas were searching from outside the metro area. Nearly 40 percent of these inbound searches originated in Los Angeles, followed by the San Francisco Bay Area (12%), Portland, Oregon (8%), and Seattle (5%). The influx of new residents to the area is causing prices and competition to accelerate. Median home prices in Las Vegas rose by 11 percent in July year over year, marking 17 months in a row of double-digit price growth.

“Affordability definitely plays a role in home searchers considering Las Vegas as their new home city,” said Nicole Lazarski, a Redfin agent in Las Vegas. “Even though home prices are climbing fast, they have still not returned to their 2007 height. With a median sale price around $270,000 in July, plus Nevada’s low property taxes and lack of a state income tax, it’s a very attractive place for people looking to leave California and other expensive places.”

In Las Vegas, the typical homeowner pays $1,500 (0.8%) in property taxes and about 8 percent in local sales taxes, with no state income tax, whereas in Los Angeles, the respective amounts are $3,600 (0.8%) property taxes, about 9 percent sales tax rate, and 8 percent state income tax rate.

To read the full report, complete with more data, interactive charts and methodology, click here.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $60 billion in home sales.

A Decade After Housing Bust, Recovery is a Story of Location

– A Handful of Powerful Markets Lead the Nation’s Recovery, But Millions of Homeowners Are Still Waiting to Regain Lost Value

– The median home value nationwide is 8.7 percent higher than it was at the height of the housing bubble.

– Twenty-one of the top 35 metros have more than recovered from the bust. San Jose and Denver lead the recovery with huge gains, while Las Vegas, Orlando and Chicago have been the slowest to recover.

– Nationwide, home values now are nearly equal to what they would have been had values continued along the pre-bubble trend without a bubble or bust.

Seattle, WA – Sept. 13, 2018 (PRNewswire) A decade after the collapse of the housing market and start of the Great Recession, home values have more than recovered in most of the nation’s largest markets, a Zillow® analysis shows. The markets with the highest gains above the mid-2000s bubble are primarily in the West and Southwest.

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San Jose – the nation’s most expensive metro – leads the way with a current median home value of $1.29 million, 74 percent higher than the top of the bubble and more than double its post-crash low. Denver follows with its median value of $397,800 representing a 66 percent increase from the bubble’s peak, though, unlike other parts of the country, Denver never experienced a rapid run-up of prices during the bubble years. In all, home values in 21 of the nation’s largest 35 markets are higher than their pre-recession peaks.

But plenty of markets are still struggling to recover their lost value. Homes in Las Vegas, which have seen some of the steepest gains in the country over the past year, remain 16 percent below their pre-bust median value. Orlando and Chicago home values remain nearly 14 percent below.

September 15 marks the 10th anniversary of the collapse of Lehman Brothers, generally considered the start of the Great Recessioni. By the end of 2011 home values nationwide had dropped 17 percent, and close to a third of homeowners were underwater in their mortgages. Millions of people lost homes to foreclosure.

Today, median home values nationwide are about 8.7 percent above what they were at the bubble’s peak, and more than half the nation’s homes have regained their lost value. Less than 10 percent of homeowners are underwater on their mortgages, though that number jumps to the mid-teens in markets like Chicago and Baltimore where recovery has been stubbornly slow.

“A decade after the financial crisis it’s clear that, just as the bust was felt very differently across the country, so has the recovery. Looking back, the housing bust was a rare historical moment when housing markets across the country moved in sync,” said Zillow Senior Economist Aaron Terrazas. “While markets like San Jose, San Francisco and Denver have led the country out of the bust and are doing very well – in many cases now dealing with an affordability crisis – plenty of markets continue to bear visible scars from the crash. Homes that still are worth less than they were a decade ago mean more long-term homeowners remain tethered to underwater mortgages, still struggling to regain that lost value. In the markets that have seen the strongest recoveries, a combination of strong job growth, tight supply and low interest rates have pushed home values upward. But in places that continue to struggle, the stimulus of low mortgage rates is quickly turning to a headwind and the window for a full recovery is quickly closing.”

Following the crash, lending tightened significantly and inventory shrank throughout the country. Nationwide, the median home value is now about what it would have been had values continued on the pre-bubble trend without a bubble or bust. Homeownership rates nationally are beginning to climb but are still down more than four percent from 2006.

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Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

(i) According to NBER, the official arbiter of U.S. economic expansions and contractions, the recession started in December 2007, nearly a full year before the Lehman crash. For more information, visit http://www.nber.org/cycles/recessions.html

US Housing Starts to Rise 2.4% Yearly to 2022

Favorable Demographic Trends and Improving Consumer Finances Will Propel Gains

Cleveland, OH – Sept. 13, 2018 (PRNewswire) US housing starts are forecast to see annual growth of 2.4% through 2022, according to Housing: United States, a report recently released by Freedonia Focus Reports. Builders will benefit from rising levels of employment and strengthening consumer finances. Population growth and household creation will also support gains. Despite the robust annual growth projected for housing starts, total 2022 activity is only expected to reach 2007 levels. The vitality of the housing market in the years leading up to 2007 was boosted by unsustainable factors (e.g., easy access to credit) that are unlikely to reoccur in the forecast period.

More information about the report is available here.

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Single-unit conventional housing starts are projected to remain the largest segment. Rising household formation will continue to support new residential construction. However, the average size of new single-unit conventional homes is expected to decline to 2022, reversing the gains of the 2007-2017 decade.

These and other key insights are featured in Housing: United States. This report forecasts to 2022 US housing starts and the housing stock in units, and average floor space per new and existing units in square feet. Each measure is segmented by housing type in terms of:

  • single-unit conventional
  • multiple-unit conventional
  • manufactured

In addition, housing starts and the housing stock, as well as existing home sales, are segmented by region as follows: South, Midwest, West, Northeast. Furthermore, spending on residential building construction in US dollars is forecast to 2022 and is segmented by type as follows: single-unit, multiple-unit, and improvements.

To illustrate historical trends, housing starts, the housing stock, existing home sales, average floor space, residential building construction expenditures, the median price of new single-unit conventional homes, interest rates, and the various segments are provided in annual series from 2007 to 2017.

About Freedonia Focus Reports

Each month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Building Products reports can be purchased at Freedonia Focus Reports or MarketResearch.com.

Analysis is intended to guide the busy reader through pertinent topics in rapid succession, including:

  • total historical market size and industry output
  • segmentation by products and markets
  • identification of market drivers, constraints, and key indicators
  • segment-by-segment outlook in five-year forecasts
  • a survey of the supply base
  • suggested resources for further study

Press Contact:

Corinne Gangloff
+1 440.684.9600
cgangloff@freedoniagroup.com

Realtors® Demonstrate Commitment to Fair Housing at Congressional Black Caucus Event

Washington, D.C. – September 13, 2018 (nar.realtor) The 50th anniversary of the Fair Housing Act, declining African-American homeownership, gentrification, and creative solutions were top of mind for many of the 10,000 people attending the Congressional Black Caucus Foundation’s 48th Annual Legislative Conference in Washington, D.C., including Realtors® and NAR Advocacy staff.

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NAR’s Federal Political Coordinators are leveraging this Annual Legislative Conference, or ALC, as an opportunity to network with their Member of Congress, industry professionals and other small business owners. This specially-selected group of 535 Realtors® serve as the voice and face of real estate to federal lawmakers and play a pivotal role in Realtors®’ outreach. They work closely with members of Congress and the Congressional Black Caucus, along with NAR’s D.C.-based lobbyists and regulatory staff to advance shared goals for the African-American community. In past years, NAR has joined hundreds of other organizations and businesses to sponsor conference activities and events.

“This year, as we recognize the 50th anniversary of the Fair Housing Act, the National Association of Realtors® remains committed to working with groups like the Congressional Black Caucus and the Department of Housing and Urban Development to advance policies that remove barriers to African-American homeownership in the United States. That includes a collaborative partnership, from both the private and public sectors, to ensure the Fair Housing Act is serving its core purpose as intended by Congress,” National Association of Realtors® President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, said.

Just two years after the Fair Housing Act was passed, the African-American homeownership rate sat at 41.6%. Today, African-American homeownership remains at 41.6%, the lowest rate among all racial groups. For this reason, NAR is committed to working with NAREB, the Urban Institute and other partners to remove barriers to and encourage African-American homeownership.

“Not only is Fair Housing integral to the ethical commitment of our members, as outlined in the Realtor® Code of Ethics, it is critical to our ability to serve our customers, clients and the community. Realtors® look forward to continuing to work to ensure affordable and sustainable housing opportunities are available for Americans in every corner of this country,” Mendenhall continued.

The impact of civil and social movements over the last 50 years has played a major role in changing the trajectory of American history. This year’s ALC theme, “The Dream Still Demands,” focused on the influence and legacy of these moments, while uplifting present-day champions in the fight for racial equality, justice and freedom in all arenas, including housing.

NAR’s diversity partner, the National Association of Real Estate Brokers, co-hosted this year’s session, titled “50-year Journey: The Fair Housing Act to the Current State of Housing in Black America.” Moderated by Realtor® and NAREB president Jeffrey Hick, the two-hour session featured keynote speaker Richard Rothstein, the Economic Policy Institute’s Distinguished Fellow and author of The Color of Law: A Forgotten History of How Our Government Segregated America. Panelists included Mark Alston, a Realtor® and Chairman of the NAREB’s Public Affairs Committee.

NAR’s Federal Political Coordinators involved in today’s events included Erin Brown of New Jersey; Sharon Middlebrooks of Texas; Nykea Pippion of Illinois; Chandra Patterson of Virginia; Ron Mazier of Louisiana; and Gwen Wynn of Maryland. These Realtors® coordinate with Representatives Donald Payne, Eddie Bernice Johnson, Bobby Rush, Bobby Scott, Cedric Richmond and Elijah Cummings, respectively.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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