Out-of-town homebuyers are driving up real-estate prices in these 10 overvalued cities, and information technology's fueling housing-bubble fears
George Glover
Nashville, Tennessee, was the near overvalued housing market in the US, the real-estate brokerage Redfin institute. f11photo/Shutterstock
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Redfin surveyed 49 cities to determine the most competitive housing markets in the US.
Out-of-town buyers could afford almost 30% more than than locals in Nashville and New York, Redfin found.
Insider breaks down why skyrocketing housing prices are driving bubble fears.
Locals had almost thirty% less to spend buying a house compared to out-of-towners in 10 US cities, a new study from Redfin indicated.
The real-manor brokerage listed the southern-migration hot spots Atlanta, Miami, and Nashville equally some of the U.s.a.'s most competitive housing markets, alongside New York and Philadelphia.
To determine the hottest existent-manor markets, Redfin analyzed its users' boilerplate maximum listing-price filters. It found that out-of-towners had more to spend than locals in 42 of the 49 cities surveyed, and it cited the rise of working from home as one reason for the gap.
"Many American dwelling buyers were able to widen their searches in 2022 equally many employers made remote-work options permanent," Redfin's data journalist Dana Anderson wrote in the report. "Remote workers are now able to move somewhere more affordable than their hometown, then it stands to reason that out-of-towners ofttimes have bigger budgets than locals."
Housing bubble
There could be a significant overlap between the surge in out-of-town buyers and the rising number of real-manor investors buying US homes. A separate Redfin report institute that investors bought a record 18.4% of homes sold over the concluding quarter, up from 12.6% a yr ago.
Atlanta appeared to be the urban center experiencing the most significant squeeze, with investors ownership 32.seven% of homes. There was besides a 26.i% gap between locals' and out-of-towners' average budgets.
Sheharyar Bokhari, an economist at Redfin, said that soaring house prices were punishing locals in cities such equally Atlanta; Charlotte, North Carolina; and Jacksonville, Florida.
"Record-high home prices are problematic for private homebuyers," he said in the Redfin investor-homebuyer report.
He continued: "Investors are chasing rising prices because rental payments are as well skyrocketing, incentivizing investors who plan to hire out the homes they purchase. The supply shortage is also an advantage for landlords, equally many people who can't observe a dwelling to purchase are forced to hire instead."
"Investors buying up a record share of for-sale homes is ane gene making this market place difficult," Bokhari added.
The combination of surging property prices and increased firm flipping could exist a sign of a developing housing bubble, said analysts such as Desmond Lachman, a senior young man at the American Enterprise Constitute. That bubble may pop if interest rates ascension.
"Every bit soon as the Fed starts raising interest rates in an ambitious style, there's the real run a risk that it bursts the asset price bubbles and that could move us into a recession ," Lachman told Nikkei, a Japanese fiscal newspaper, in a recent interview.
UBS also sounded the alarm most a existent-estate bubble in Oct, with ii strategists saying that "a long, lean spell for cities' housing markets looks more than and more probable."
Competitive markets
Nashville is now the virtually competitive housing market in the US, Redfin found, with the Tennessee city appealing to out-of-towners considering there'south no state income taxation. Firm prices have surged past just under 23% over the past year, pushing the gap betwixt locals' and migrants' budgets to 28.5%.
"We're seeing a lot of out-of-state transplants, mostly from states like California that have an income revenue enhancement," said Promise Geyer, a Redfin amanuensis in Nashville. "People moving from the West Coast will pay way over asking price without batting an eye."
"Information technology's actually hard for locals to compete right now, and it tin exist devastating for first-time buyers who aren't able to offset high prices by selling a home earlier they buy a new one," she added.
Philadelphia and New York rounded out the top three, with out-of-towners willing to pay a staggering $i.2 million for a business firm in the latter metropolis. Insider bankrupt down the US's x almost competitive housing markets right now, sorted past the gap between locals' and out-of-towners' average budget.
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