Being an out-of-town buyer has its advantages and down-sides; they typically pay more for a home than locals, but that does make sellers favor them more. Out-of-towners, on average, pay about 30% more, according to a new report from Redfin. The new report ranks each city by its budget gap between out-of-town buyers and local buyers, with Nashville taking first place.
In Nashville, the average out-of-towner paid $736,900 for a home in 2021, 28.5% higher than the $573,400 average for local buyers. Next is Philadelphia, where the average out-of-towners came in with $559,200 — 28.4% higher than the budget of a local buyer. That’s followed by New York City, where the average out-of-towner had a 26.5% higher budget than the average local, and Atlanta, where migrants had a 26.1% bigger budget. Miami came in fifth with an average out-of-town budget 25.1% higher than that of locals.
Overall, out-of-towners have higher budgets than local buyers in 42 of the 49 cities included in Redfin’s report.
Many Americans were able to widen their search for a home during the pandemic as remote-work became more common. Remote workers were able to move into more affordable towns, which also explains why out-of-towners come in with bigger pockets. Oftentimes they come in from cities that pay higher salaries, or they just sold a home in a more expensive city.
Movers coming in from coastal California to an area that’s comparably affordable, like Nashville or Atlanta, will find reprieve from the extraordinarily high prices they’re used to seeing. The typical home in Los Angeles for example — the most common origin of people moving to Nashville — sold for $950,000 in December compared to $411,000 in Nashville. The typical home in New York City — the most common origin of people moving to Atlanta and Miami — sold for $785,000, versus $385,000 in Atlanta and $459,000 in Miami.
The influx of rich out-of-town buyers has contributed to the rise in home prices within popular migration destinations, pricing out many locals. Although Nashville prices remain lower than many coastal cities, within a year home prices increased 22.6% due to out-of-towners moving in. So, while Nashville may be a good destination for movers coming in from Los Angeles, many locals are stuck renting.
“We’re seeing a lot of out-of-state transplants, mostly from states like California that have an income tax,” said Hope Geyer, a Redfin agent in Nashville, where there’s no state income tax. “People moving from the West Coast will pay way over asking price without batting an eye. In their eyes, they’re getting a deal. It’s really hard for locals to compete right now, and it can be devastating for first-time buyers who aren’t able to offset high prices by selling a home before they buy a new one.”
