An analysis of data from the 25 largest U.S. metro areas collected by real estate listings website Redfin shows that these trends are often true, including in the Bay Area.
However, some areas have proved to be surprising exceptions – among them Sacramento, a popular destination for Bay Area residents whose housing market, red-hot early in the pandemic, has recently cooled significantly.
Using data from Redfin, we calculated new residents per 10,000 people in the 25 largest U.S. metro areas based on data from April 2022, and the average percent increase of median home sale prices from April 2021 to April 2022. Using its search data, Redfin calculates estimated migration numbers based on U.S. Census data.
As defined by Redfin, the Bay Area is part of a U.S. Census statistical area that combines the metro areas of San Francisco and San Jose, and encompasses the nine Bay Area counties plus five more: Merced, San Benito, San Joaquin, Santa Cruz and Stanislaus. Of the 25 markets examined, the San Francisco-San Jose metro area showed the highest residents per 10,000 looking to leave the area in the past year, at -33.3. During that time, home sale prices in the area increased year-over-year by 12.6%.
Those trends could be due to a number of factors, said Redfin deputy chief economist Taylor Marr. Decreases in population are a relatively recent phenomenon in the Bay Area, he said. More people were moving to the Bay Area than leaving in 2014, but the tide began to change in 2015, with immigraton rates declining and then dropping “dramatically” in subsequent years.
California lost more than 117,000 residents in 2021, with several Bay Area counties including San Francisco driving the increase, each losing nearly 1% of their population. Still, last year’s statewide population decline was lower than the 2020 estimate of 182,083.
Meanwhile, home buying surged in the region during the pandemic as many people sought out more space and could work remotely. That demand, combined with low inventory, has continued to push home prices higher in the Bay Area, despite the outward migration trend.
Demand for homes in the region was strong earlier this year, Marr said, propelled by the “booming stock market” and low interest rates. He also noted that while overall population may have declined, the number of households within the Bay Area grew, with more people moving out of their parents’ homes or roommate situations, getting married and starting families.
But with interest rates rising, price growth likely won’t last for long, Marr said.
“Interest rates now rose at their fastest pace in history and are above 5%,” he said – likely causing home buyers to rethink how much they can afford. “I expect price growth to slow down and maybe turn negative in some areas,” he said.
While that pattern will likely be seen across the U.S., Marr said, coastal metro areas are usually more sensitive to financial market conditions, and therefore might see a bigger impact.
Sacramento had the highest incoming migration rate among the 25 major metros examined by Redfin, at 24.5 new people per 10,000 residents, but a relatively modest home sale price increase of 12.3% year-over-year. The metro area attracted many Bay Area residents earlier in the pandemic, as offices went remote and people sought out more space.
Marr said a “dramatic” 30% rise in home price growth in spring 2021 was followed by a “really big slowdown” more recently. While he said he couldn’t pinpoint the reasons, he suspected that during that period, many Bay Area residents left for a wider range of places out of state, not just Sacramento and the Central Valley.
Greater supply might also be keeping Sacramento’s home-price growth lower, he added. According to the April 2022 report from the Sacramento Association of Realtors, inventory increased 33% from April of last year, with 1,342 active listings as of April 2022.
In contrast with Sacramento, some areas with high home price increases are seeing more and more people leaving. Seattle is the prime example, with the second largest outflow migration of -28.9 per 10,000 and a home price increase of 18.2%.
Many buyers have simply been priced out of the market, Marr said.
“Our data shows Seattle was still attracting more people moving there a year ago,” he said. “Now more people are leaving Seattle. It used to be booming and the fastest growing region, and quickly turned as prices grew so rapidly.”
Salt Lake City is following a similar pattern, he said. In the last quarter of 2020, a “boom of people moved there” and the inflow remained positive in 2021 until the first quarter of this year.
“I think it’s fascinating that declining migration is indicative of a region that just got too hot,” he said, noting that many locals could no longer afford the higher home prices, and are looking to secondary markets.
The major U.S. metro areas with the highest inward migration and home price increases year-over-year include Phoenix, Orlando and Dallas.
Marr said people leaving the Bay Area had a “big impact” on places including Phoenix, some Texas cities, Seattle, Denver and Salt Lake City. He said those buyers brought with them deep pockets, whether they sold their Bay Area homes and had a lot of cash on hand, or had high salaries and the ability to work remotely.
“On average the budget of out-of-town buyers is significantly higher,” he said, and the amount of wealth flowing into those markets has pushed up home price inflation.
On the East Coast, Marr said the pattern is slightly different. While many New Yorkers moved to Atlanta and Florida metros, there were also a lot more second home buyers purchasing properties in Florida and the Gulf Coast, he said.
Kellie Hwang is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @KellieHwang