The average out-of-towner moving to Philadelphia in the first half of 2022 had $588,000 to spend on a home, 39% higher than the $422,000 average budget for local buyers. That’s the biggest gap among the cities included in this analysis.
New York comes next, with an average out-of-town budget of $1.3 million, 31% higher than the average local budget. It’s followed by Atlanta (30% higher), Dallas (22% higher) and Portland, OR (18% higher). Out-of-towners had higher budgets in 19 of the 23 cities in this analysis.
That’s according to an analysis of average maximum list-price filters for homes set by Redfin.com users in their saved searches. The analysis includes U.S. cities with at least 1,500 Redfin.com home searchers from inside the metro and 1,500 from outside the metro from January through June 2022.
Newcomers to Philadelphia have significantly higher budgets because they typically come from coastal job centers with high salaries and cash on hand from selling a high-value home. Philadelphia’s popularity with affluent out-of-town homebuyers shot up at the beginning of the pandemic as remote work made it feasible to move to a more affordable area while keeping a high hometown salary. New York is by far the most common origin for out-of-towners moving to Philadelphia, and it also attracts a lot of migrants from Washington, D.C. and Los Angeles.
“Philadelphia sits right between New York and D.C., both places where the cost of living is essentially triple what it is here,” said local Redfin agent Trey Dodge. “Full-time remote workers–and some people who commute the 90 minutes to New York a few days a week–realize they can get more for their money here, while still reaping the benefits of a big-city lifestyle. I’ve watched home prices rise over the last two years, and it’s mostly because out-of-towners are buying high-end properties.”
The typical Philadelphia home sold for just $300,000 in June, less than half of New York’s $705,000 median sale price. Prices in Philadelphia have also grown slower: They’re up 20% from the beginning of the pandemic, compared with a 26% jump in New York and a 38% nationwide bump.
“Even though the housing market has slowed, the share of homebuyers moving to different parts of the country has not,” said Redfin Deputy Chief Economist Taylor Marr. “That’s partly because home prices and mortgage rates have increased so much that homebuyers with the flexibility to relocate are seeking out affordable areas. Someone moving from Los Angeles to Philadelphia may have a higher monthly housing payment than they would have six months ago, but it’s still much lower than it would be in coastal California.”
“The market looks different for locals, many of whom are priced out or driven to search in the suburbs because both home prices and mortgage payments have risen significantly in the last year,” Marr continued. “But local buyers may get a break as the market cools and competition slows.”
Atlanta and Dallas are also popular pandemic-fueled migration destinations. Dallas was the 10th most popular destination in the second quarter, and Atlanta came in at number 12.
Newcomers to Atlanta and Dallas have bigger budgets for much the same reason they do in Philadelphia: They’re typically coming from more expensive places with higher incomes, most prominently New York and Los Angeles. The typical homes in both Atlanta and Dallas sold for under $460,000 in June, much lower than prices in New York ($705,000) and Los Angeles ($890,000).
The places with the biggest budget gaps are different now than at the beginning of the pandemic. Nashville, Atlanta and Austin topped the list of places where newcomers had the biggest budget premiums in 2020. Migration into both Nashville and Austin has slowed significantly in 2022, largely because out-of-town buyers pushed up prices. Prices are up 44% in Nashville and 57% in Austin since the beginning of the pandemic.
The story is different in New York, one of the priciest metro areas in the country. One reason why house hunters in New York have bigger budgets than locals: Many of those out-of-towners actually are locals–and they’re wealthy locals.
While New York lost a lot of residents in the beginning of the pandemic as affluent remote workers decamped to rural and suburban areas, it’s now making a comeback. The flow of homebuyers leaving New York slowed significantly in the first half of 2022 as some workers returned to the office and social and cultural events ramped back up.
“A lot of the people who can afford to buy homes in New York right now are those moving back to the city after a pandemic hiatus, and they likely have more money than the locals who stayed put,” said Masha Berman, a Redfin agent in New York. “I’m also seeing a lot of out-of-town investors and affluent pied-a-terre buyers.”
Locals had higher budgets than out-of-towners in four of the 23 cities, all of them in California and three in the Bay Area.
The average budget for locals in Fremont, CA (located in the East Bay) was about $1.9 million, 20% higher than the average migrant budget and the biggest gap among the cities in this analysis. Next comes San Francisco, where the average local budget was about $2.1 million, 12% higher than the average migrant budget. It’s followed by San Jose (4% higher) and Irvine (3% higher).
Bay Area locals have bigger budgets than people moving in from other parts of the country because they have the highest incomes in the U.S.
Ranking: Cities at the top have bigger percent differences between budgets for migrants and locals
