Redfin analyzed the searches performed by 1 million+ Redfin users who searched online for homes in the fourth quarter (Q4) of 2017.
22% of Redfin searchers looked for homes outside their current metro area. Most of the searchers looking to leave were concentrated in high-cost areas.
Here in California, the share of Redfin searchers looking outside their metro in Q4 2017 was:
- 54% of searchers from Santa Maria;
- 52% of searchers from Salinas;
- 38% of searchers from Modesto;
- 38% of searchers from San Luis Obispo;
- 33% of searchers from Fresno;
- 20% of searchers from San Diego;
- 19% of searchers from San Francisco;
- 19% of searchers from Sacramento;
- 19% of searchers from San Jose; and
- 16% of searchers from Los Angeles.
On the other end of the economic scale, low-cost, Southern and Southwestern states saw the most non-local searchers eyeing their metros. The top three “net inflow” searches focused on homes in:
- Las Vegas; and
This dynamic suggests homebuyers desire to leave high-cost areas and move to places where their dollar goes further (i.e. buys a bigger house with a smaller tax bill). This possibility is worrisome for real estate professionals, who rely largely on repeat clients and word of mouth business — hard if all your old clients are moving out of the area. But examining California’s list of home searchers reveals a more complicated dynamic.
It’s all about the jobs
At the top of the list, Santa Maria, Salinas, Modesto and Fresno are all areas where agriculture plays a large role in the local economy. The agricultural community sees high numbers of seasonal migrants, which accounts for much of the searches outside each respective metro. A portion of the other searches can be explained by the large military population in some of these metros.
At the bottom of the list, the biggest — most expensive — coastal cities all see a below average share of users searching outside their metro. In particular, San Francisco, San Jose, Los Angeles and San Diego all have just 20% or less of their searchers looking elsewhere, compared to the 22% national average.
While these large coastal cities are expensive, a larger share of Redfin users in California’s biggest cities are staying within their metros compared to their less-expensive neighboring metro areas.
The reason? These cities are not just home to expensive real estate — they’re also where all the state’s attractive, high-paying and stable job industries are located. Job growth is steady in these regions, soon to exceed the pre-recession peak.
The number of jobs actually exceeded the number of jobs held in California prior to the recession back in 2014. But when counting the interim population growth, the real jobs recovery has yet to occur. Based on current job growth, jobs will reach a full recovery in 2019.
For California real estate professionals, the jobs recovery will bring with it a more stable base for the housing market. Home sales volume — stagnant since 2009 — will rise significantly, and agents will profit with more sales. The housing market will likely see a peak in sales volume and prices around 2020-2021.