5 Florida Metros in Top 10 for Out-of-State Buyers
By Kerry Smith
In 2Q 2023, Florida remained a top go-to state, with the lion’s share relocating from New York, but Chicago provided more buyers for Cape Coral, No. 7 on the list.
SEATTLE – A record one-in-four national homebuyers (25.5%) searched for homes in metros outside their current state in the in the second quarter, up from 23% one year earlier, according to a report from Redfin. Before the pandemic, it was 19%.
The total number of out-of-state-seeking buyers declined 7.5%, however the percentage grew because the number of people interested in in-state moves declined even more, down 18%.
Of the top 10 states eyed for residency, Florida metros made up 50% of the top 10 go-to state metros. Tampa ranked highest at No. 3, and Las Vegas moved into the top spot based largely on the number of Los Angeles residents looking for a new out-of-state city to call home.
Top 10 out-of-state metros in the 2nd Quarter of 2023.
Las Vegas: Net inflow 5,700. Top origin: Los Angeles
Phoenix: Net inflow 5,300. Top origin: Seattle
Tampa: Net inflow 5,000. Top origin: New York City
Orlando: Net inflow 4,900. Top origin: New York City
Sacramento, Calif. Net inflow 4,800. Top origin: Chicago
North Port-Sarasota: Net inflow 4,700. Top origin: New York City
Cape Coral: Net inflow 4,100. Top origin: Chicago
Dallas: Net inflow 4,100. Top origin: Los Angeles
Miami: Net inflow 3,700. Top origin: New York City
Houston: Net inflow 3,600. Top origin: New York City
Las Vegas topped Redfin’s list for the first time. The report notes that a typical Las Vegas home sells for $412,000, or less than half the price of a home in Los Angeles, and, “It’s a similar story for the other popular migration destinations, which include Phoenix, Sacramento and several Florida metros.”
Of the top 10, nine have lower median sale prices than the top origin metro of buyers moving in.
A federal "junk-fees" initiative led major rental websites to announce “total rental fees” notices early in the process: Zillow, Apartments.com and AffordableHousing.com.
WASHINGTON – President Biden and U.S. Department of Housing and Urban Development (HUD) Secretary Marcia L. Fudge announced that several of the biggest rental housing search platforms will increase transparency of housing fees. The three rental-ad websites agreeing to make the full cost of rental easier to understand early in the process include Zillow, Apartments.com and AffordableHousing.com.
“Too often, renters are hit with unexpected fees on top of their rent,” HUD Secretary Marcia L. Fudge said in making the announcement. “Today’s announcement shows the Biden-Harris Administration’s commitment to lower costs for renters and build a fairer, more transparent rental housing marketplace.”
According to HUD, fees can “be a serious burden on renters.” It also provides an example: “Rental application fees can be up to $100 or more per application, and … often exceed the actual cost of conducting the background and credit checks. Given that prospective renters often apply for multiple units over the course of their housing search, these application fees can add up to hundreds of dollars.”
Companies and the planned changes
Zillow is launching a “Cost of Renting Summary” on its active apartment listings. It claims to have 28 million unique monthly users on its rental platform. The tool will enable renters to easily find out the total cost of renting an apartment from the outset, including all monthly costs and one-time costs, like security deposits and application fees.
Apartments.com will announce later this year the launch a new calculator that will help renters determine the all-in-on-place price of a desired unit. It will include all up-front costs as well as recurring monthly rents and fees. The Apartments.com Network currently lists almost 1.5 million active availabilities across more than 385,000 properties.
AffordableHousing.com, the nation’s largest online platform dedicated solely to affordable housing, will require owners to disclose all refundable and non-refundable fees and charges upfront in their listings. It will also launch a new “Trusted Owner” badge that “protects renters from being charged junk fees by identifying owners who have a history of adhering to best practices, including commitment to reasonable fee limits, no junk fees, and full fee disclosure.”
In addition to the rental website announcement, HUD’s Office of Policy Development and Research released a brief that highlights state, local, and private sector strategies to encourage fairness and transparency in the rental market. The guide includes actions to reign in excessive or unfair application fees and limit allowable fees and deposits at the time of move-in or lease signing.
Someday a buyer’s market will return, but it’s not today and it won’t be tomorrow. Bidding wars have returned and some metros still see rising prices.
NEW YORK – After a record-breaking run that saw mortgage rates plunge to all-time lows and home prices soar to new highs, the U.S. housing market finally started slowing in late 2022. Mortgage companies engaged in mass layoffs, real estate economists lamented a “housing recession” and home prices seemed poised for a correction.
But a strange thing happened on the way to the housing crash: Home values started rising again. In fact, housing prices have increased for three months in a row, according to the latest Case-Shiller home price index.
“The U.S. housing market continued to strengthen in April 2023,” Craig J. Lazzara, managing director at S&P Dow Jones Indices, said in a June 27 statement about the latest Case-Shiller reading. “Home prices peaked in June 2022, declined until January 2023, and then began to recover.”
Yes, home values were down compared to April 2022 – but only by a mere 0.2%. In other words, the housing boom might be over, but this pause in the real estate market isn’t shaping up as a crash.
Crunching the numbers in a different way, the National Association of Realtors (NAR) reports that median sale prices of existing homes had declined year-over-year for four consecutive months through May, with February’s drop marking the first decline in nearly 11 years.
This breather comes after a real estate party that raged on longer than anyone expected. NAR reported that median prices in the spring of 2022 topped $400,000 for the first time ever. Even after the recent retreat, prices are up by more than $100,000 since the coronavirus pandemic began in March 2020, according to NAR data.
Now, bidding wars have returned, and inventories remain frustratingly tight. “You’re not going to see house prices decline,” says Rick Arvielo, head of mortgage firm New American Funding. “There’s just not enough inventory.”
Skylar Olsen, chief economist at Zillow, agrees about the supply-and-demand imbalance. Her latest forecast says home prices will keep rising into 2024 – welcome news for sellers but not so great for first-time buyers struggling to become homeowners. “We’re not in that space where things are suddenly going to be more affordable,” Olsen says.
Still, a rapid rise in mortgage rates and a sharp slowdown in home sales has some bracing for the worst. In late May, Elon Musk – the multibillionaire founder of Tesla and owner of Twitter – tweeted this prediction: “Commercial real estate is melting down fast. Home values next.”
After the June 14 Fed meeting, Fed Chairman Jerome Powell told reporters he was keeping a close eye on the housing market. “Housing is very interest-sensitive, and it’s one of the first places that’s either helped by low rates or held back by higher rates,” Powell said in the press conference. “We’re watching that situation carefully.”
Regardless, housing economists and analysts agree that any market correction is likely to be a modest one. No one expects price drops on the scale of the declines experienced during the Great Recession. Rob Dietz, chief economist at the National Association of Home Builders, sums up the consensus among housing experts: “We’re thinking this is going to be a moderate downturn,” he says.
Is the housing market going to crash?
The last time the U.S. housing market looked so frothy was back in 2005 to 2007. Then home values crashed, with disastrous consequences. When the real estate bubble burst, the global economy plunged into the deepest downturn since the Great Depression. Now that the housing boom is threatened by soaring mortgage rates and a potential recession, buyers and homeowners are asking a familiar question: Is the housing market about to crash?
Housing economists agree that prices could fall further, but the decline won’t be as severe as the one homeowners experienced during the Great Recession.
One obvious difference between now and then is that homeowners’ personal balance sheets are much stronger today than they were 15 years ago. The typical homeowner with a mortgage has stellar credit, a ton of home equity and a fixed-rate mortgage locked in at a rate well below 5% – in fact, according to a new Redfin study, 82.4% of all current homeowners are locked in below the 5% mark.
What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale.
“We’re thinking this is going to be a moderate downturn.” – Rob Dietz, National Association of Home Builders chief economist
SEATTLE – Roughly 14 of every 1,000 U.S. homes changed hands during the first six months of 2023. That’s down from 19 of every 1,000 during the same period of 2019 and the lowest turnover rate in at least a decade, according to areportfrom Redfin.
In 2018, Freddie Mac estimated that the U.S. needed about 2.5 million more homes to meet demand, mainly due to a lack of single-family home. However, remote work and investor purchases during the homebuying boom of late 2020 and 202 depleted already-low inventory levels.
The final nail in the coffin was 2022’s soaring mortgage rates – average rates nearly doubled from January to June – that handcuffed existing homeowners to their comparatively low rates.
“The quick increase in mortgage rates created an uphill battle for many Americans who want to buy a home by locking up inventory and making the homes that do hit the market too expensive. The typical home is selling for about 40% more than before the pandemic,” says Redfin Deputy Chief Economist Taylor Marr.
What could open up the market?
“Mortgage rates dropping closer to 5% would make the biggest dent in the affordability crisis by freeing up some inventory and bringing monthly payments down,” says Marr. “But there are a few other things that would boost turnover and help make homes more affordable. Building more housing is imperative, and federal and local governments can help by reforming zoning and making the building process easier. Financial incentives, like reducing transfer taxes for home sellers and subsidizing major moves with tax breaks, would also add to supply.”
Large suburban homes have seen the biggest drop in availability. Just about 16 of every 1,000 four-bedroom-plus suburban single-family homes (1.6%) sold in the first half of 2023, down from 24 of every 1,000 that sold in the same period in 2019 (2.4%).
Other study findings
The turnover rate dropped for every size home in every type of neighborhood over the last four years (though buyers will have an easier time finding something for sale in certain metro areas).
The turnover rate of condos and townhomes didn’t shrink as much as single-family homes during the pandemic.
Modestly sized single-family homes in the city are hardest to find: Just 11 of every 1,000 two- and three-bedroom urban houses sold in the first half of this year
Smaller houses in the city have the lowest turnover rate of all home types. Roughly 11 of every 1,000 two- and three-bedroom single-family homes in urban neighborhoods sold in the first six months of 2023, compared to 14 of every 1,000 during the same period in 2019.
Two- to three-bedroom homes in suburban neighborhoods are essentially tied with their urban counterparts for the lowest turnover rate, with 11 of every 1,000 changing hands this year. That’s down from 16 of every 1,000 in 2019.
The average rate on a 30-year, fixed-rate mortgage rose for the third week in a row, hitting 6.96% – up from last week’s 6.81% and 6.71% the week before.
LOS ANGELES (AP) – The average long-term U.S. mortgage rate climbed this week to just under 7%, the highest level since November and the latest setback for homebuyers already grappling with a tough housing market constrained by a dearth of homes for sale.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.96% from 6.81% last week. A year ago, the rate averaged 5.51%.
It’s the third consecutive week of higher rates, lifting the average rate to its highest level since it surged to 7.08% in early November. High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans.
The latest increase in rates follows a recent sharp upward move in the 10-year Treasury yield, which climbed above 4% last week for the first time since early March. The yield, which lenders used to price rates on mortgages and other loans, was down to 3.80% in midday trading Thursday following new data pointing to cooler inflation, which led bond traders to trim bets for more rate hikes by the Federal Reserve later this year.
On Wednesday, the U.S. government reported that inflation at the consumer level rose 3% in June from a year earlier, marking its lowest point since early 2021, though it remains above the Fed’s 2% target.
“Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than two years,” said Sam Khater, Freddie Mac’s chief economist. “However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand.”
High inflation has driven the Federal Reserve to jack up interest rates at a blistering pace. Beginning with its first hike in March 2022, the central bank has lifted its benchmark interest rate to about 5.1%, its highest level in 16 years, before forgoing a hike at its meeting of policymakers last month.
Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.
The average rate on a 30-year mortgage remains more than double what it was two years ago, when ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4% from a year earlier, marking 10 consecutive months of annual declines of 20% or more, according to the National Association of Realtors.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, also rose this week, climbing to 6.30% from 6.24% last week. A year ago, it averaged 4.67%, Freddie Mac said.
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Gen Z (81%) and millennials (71%) felt the most stress, in part because many are first-time buyers. The main stress-triggers: Low inventory and rising loan rates.
CHERRY HILL, N.J. – While 54% of homebuyers say it’s a good time to purchase a home, it’s still a nerve-wracking process. According to TD’s 2023 Mortgage Service Index, 64% of respondents felt their most recent homebuying experience was stressful. Big Village Insights conducted the study.
Home inventory challenges (24%) and mortgage rates (24%) tied as the leading factors that negatively impacted home purchasing decisions. Still, 68% of buyers cited shifting interest rates over the last year as a factor in their decision to enter the market.
Given the tight inventory of existing homes for sale, though, three out of 10 buyers (29%) opted for new construction.
“The Federal Reserve has increased rates every time it has met for over a year, so the pause on rate hikes last month and the fact that we’ve likely reached a near peak may offer some respite for buyers,” says Steve Kaminski, head of U.S. Residential Lending for TD Bank. “But given the competitive market and already high home prices, it’s understandable that the headache persists for many looking to purchase a home.”
Kaminski says lower inflation and an improving economy may be “key to alleviating that stress.”
Stress by generation
Gen Z (81%) and millennial respondents (71%) were most likely to find the process stressful.
Baby boomers found the purchasing process to be a less taxing experience, with 47% of saying they didn’t find it stressful.
A strong majority of millennials (84%) and Gen Z (90%) respondents said interest rates were a factor in their decision to buy – but a majority of boomers (58%) said fluctuating interest rates were not a factor in their decision, perhaps in part because a higher percentage does not need a mortgage.
Other study findings
65% of respondents said they were familiar with programs designed to help homebuyers seek flexible down payment options
40% spent $2,000 – $5,000 in unexpected charges during the homebuying process; another 10% say they paid over $5,000.
Storms rarely have a long-term effect on the local real estate market. Cape Coral-Fort Myers listings dropped for two months after Ian but rose for the six after that.
FORT MYERS, Fla. – After plunging in the wake of last fall’s Hurricane Ian, home listings in the Cape Coral-Fort Myers metropolitan area have recovered, and sales have begun to bounce back, according to a report from Redfin.
Hurricanes present unique housing market events. Their immediate impact on the local real estate market is harsh, but investors often rush in and the number of real estate transactions bounces back and often increases.
In the two months after the devastating September 2022 storm, Cape Coral-Fort Myers saw 900 fewer new listings than there would have been had the storm not hit, according to Redfin projections. But in the six months after that, the area had 1,314 more new listings than projected, a number that more than offset the shortfall.
Put another way, the metro area had a net gain of 415 more new listings.
New listings are likely outperforming expectations due to a backlog created by the storm. Homeowners who paused selling plans or delisted properties after Hurricane Ian are now putting their homes on the market. There are also probably other homeowners who didn’t intend to sell but are now moving because their home was damaged and/or want to live in a safer area.
Redfin Senior Economist Sheharyar Bokhari says property insurance prices have gone up, but “homebuyers are still moving to the Sunshine State in search of warm weather and relatively affordable home prices,” though, “ultimately, lower-income residents may be pushed out of the riskiest areas due to rising insurance and rebuilding costs.”
The analysis focuses on home listings, but it’s worth noting that scores of vacant plots have also hit the market in Cape Coral after the homes atop many of those lots were destroyed. There were 6,167 land listings in Cape Coral as of June 16 – comparable with the number of home listings (6,619). Some don’t mention the impact of the storm or the potential for future natural disasters. Other listings do mention Hurricane Ian, and tout the opportunities for builders and homebuyers despite continued storm risk.
While some people who moved to Florida during the pandemic are leaving, new out-of-staters continue to move in, which is incentivizing homebuilders in Cape Coral to keep building, according to local Redfin Premier real estate agent Isabel Arias-Squires.
Florida has doled out 80,000 residential building permits this year–more than any other state except Texas. Arias-Squires noted that new-construction homes in Florida have the advantage of being built under the most recent building codes, providing better resistance against natural disasters
Sales bounced back but haven’t fully recovered
In the three months after Hurricane Ian, there were 723 fewer home sales in Cape Coral-Fort Myers than there would have been had the storm not hit, according to Redfin projections. But in the following five months, there were 538 more sales than projected. That means the sales shortfall had shrunk from 723 to 185 by early May 2023.
The home sale recovery suggests that many buyers continue to prioritize waterfront views, relatively affordable home prices and lower taxes more than climate concerns.
Cape Coral-Fort Myers is the seventh most popular migration destination for homebuyers, according to Redfin’s latest ranking. Four other Florida metros – Miami, Tampa, Orlando and North Port – are also in the top 10 as the Sunshine State attracts house hunters from New York, Chicago and other major metros.
Hurricane Ian and home prices
“The storm’s effect on prices was likely muted because at first, new listings fell, which pressured prices to rise due to a shortage of homes for sale.” Bokhari says. “But new listings then more than recovered, which pressured prices to fall because there was more supply than usual.”