Aug 4, 2022 - Real Estate

Phoenix newcomers have bigger home-buying budgets than locals, driving up prices

Data: Redfin; Chart: Baidi Wang/Axios

Arizonans love to blame California transplants for all of our problems, but this time we may be onto something.

  • Out-of-towners moving to Phoenix in the first half of the year had 13% more to spend on a home than locals, according to a new analysis by real estate company Redfin.
  • The average maximum budget of newcomers was $805,257 compared with $713,378 of locals.

Why it matters: Home prices have climbed by more than 50% in the past two years, at least in part because of the influx of people moving to metro Phoenix and the shortage of supply.

  • Many newcomers are keeping their out-of-state jobs and working remotely, often at higher salaries than what Phoenix employers pay.

Driving the news: Our hot housing market is cooling off a bit, but "the share of homebuyers moving to different parts of the country has not," Redfin deputy chief economist Taylor Marr said in the analysis.

What he's saying: "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."

And while metro Phoenix prices don't exactly feel affordable to many of us locals, they're still much lower than many big cities up and down the East and West coasts.

Zoom in: Local listing agent Heather Morales of Homie tells us 80% of her listings that go under contract are from out-of-state buyers moving to Arizona.

  • The majority are coming from California, Washington, Oregon, Colorado and New York.
  • They are either paying all cash or making huge down payments from the equity they made from selling their homes in other states, Morales said.

Zoom out: This isn't just an Arizona problem. Phoenix had the seventh highest budget difference between local and out-of-town buyers, according to Redfin.

  • Philadelphia had the largest spread, with newcomers able to pay almost 40% more than locals.
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