Phoenix, Austin, Sacramento, Las Vegas and Miami reported the biggest increase in home prices in May, according to a recent report from Redfin.
Home prices in Austin were up 42.4% year over year in May to $470,000, the biggest increase of the 88 largest U.S. metros. Phoenix, with a 33.3% gain to $400,000, had the second-biggest annual price increase in the U.S., and Sacramento had the fifth-biggest increase.
Prices in Las Vegas (up 18.4% to $355,000) and Miami (up 24.3% to $409,000) also saw significant year-over-year increases.
“People moving into Phoenix from California, Oregon, Washington and even the Midwest are flooding the market, depleting inventory and pushing up prices,” said Vincent Shook, a Redfin agent based in Phoenix. “So many people can work remotely from anywhere in the country, so they started looking at Arizona versus a place like Los Angeles or Seattle and thought, why stay in such a high-priced market when I can get a larger home in Phoenix for a lower price?”
Nationwide, 31.4% of Redfin.com users looked to move to a different metro area in April and May — roughly the same share Redfin saw in the first quarter and up from 27% from a year earlier.
The Radian HPI is a comprehensive and timely measure of U.S. housing market prices and conditions, and is available just 15 days after each month ends. Using the Radian HPI, data is easy to digest and deriving insights is intuitive.
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A homebuyer could purchase three homes in Austin for the price of one home in San Francisco, or two homes in Phoenix for the price of one in Los Angeles, according to Daryl Fairweather, Redfin chief economist. In San Francisco, the typical home sold for $1.54 million in May, up 2.8% from last year.
“Though prices are growing comparatively slowly in San Francisco, the price difference is still staggering,” Fairweather said. “The typical home in San Francisco sold for $1,070,000 more than the typical home in Austin in May. Even though homes in popular destinations are much more expensive than they were a year ago, it’s still well worth it for many people to leave expensive coastal cities in favor of inland metros. That’s especially true if they’re working remotely and keeping the same salary.”
In Los Angeles, the top origin for people relocating to Phoenix and Las Vegas, prices are rising so much that the home-price gap is widening. The typical home in Los Angeles sold for $815,000 in May (up 28.3% year over year), $415,000 more than the typical home in Phoenix.
To date, more than 4,500 homes in Austin have sold for between $25,000 and $99,999 above asking price. Homes are staying on the market an average of 24 days in the Lone Star state capital. In all, nearly 74% of Austin homes sold above their asking price in April, and the metro had the nation’s highest price growth that month.
Phoenix has been a hot spot for movers for years. In fact, over the past 10 years, Arizona has enjoyed the ninth-largest population increase in the past 10 years, up 11.8% from 2010, per a recent U.S. Census report. In 2020, approximately 20% of all Americans moved — and Arizona was the seventh-most popular destination of those movers.
Californians, specifically, have been moving to Nevada in droves since 2017. Low taxes, plenty of sunshine and ample living space are certainly draws for movers looking to escape the financial squeeze of more expensive states.
“Many people look at this surge we’ve been seeing in local home prices and home sales over the past five or six months and say these conditions are defying logic,” said Thomas Blanchard, the most recent president of the Greater Las Vegas Association of Realtors and managing broker for Signature Real Estate Group. “But if you look more closely, you can see that historically low mortgage interest rates and pent-up demand have a lot to do with it.”