SEATTLE – Americans who moved out of town last year typically paid less for bigger homes, according to a new Zillow analysis of move data from North American Van Lines.
This is a sharp break with the trend of recent years. The impressive strength of the housing market in 2020, coupled with a newfound motivation to move, has helped sellers capitalize on rapidly rising property values to find places that better suit their needs – namely, bigger homes in less expensive areas.
Moving companies went to zip codes where homes sold are on average 33 square feet larger than where they came from – about the size of a walk-in closet or extra bathroom. This was a significant leap from the 9- to 21-square-foot step-up movers that have been made in recent years.
“The ability to sell in a relatively expensive market and move to a cheaper location – either to save money or to make more money on a larger property – has been extremely attractive to moving companies,” said Jeff Tucker, senior economist at Zillow.
Long distance moves to the Boston subway moved in zip codes averaging $ 190,243 higher home values than where they had moved, and the homes that were sold to the suburban area were 60 square feet smaller than the moving company’s original zip codes. Those who moved out of Boston went to ZIPs, where the average home value was $ 170,429 lower than it was when it started, and properties were 131 square feet larger.
Zillow’s most recent Mover report found that the best subways for net immigration, with more people entering than leaving, are sunny and relatively affordable. Phoenix, Charlotte and Austin led the United States in terms of net immigration.
Overall, the results are proof that the Great Makeover is at work. Until March 2020, employees were largely locked to locations within a tolerable commute from their workplace. When the pandemic broke out, many started working remotely – spending a lot more time at home thinking about where and how to live. A larger home with an office or high-end kitchen, or a home with lower monthly payments in sunny Arizona became extremely tempting.
Meanwhile, interest rates continued to fall, fueling the scorching property market and boosting purchasing power for buyers. Home appreciation in 2020 was driven by massive demand and limited supply, increasing the value of typical homes by 8.4% ($ 20,716) over the course of 2020, compared to a 3.7% growth (8,791 USD in 2019).
Tucker said the trend could contribute to home price convergence as people migrate from the most expensive cities to more affordable cities, which will tend to cause prices to rise in their destinations. It can also redistribute some of the consumer spending, tax revenues and employment growth that have become increasingly concentrated in “superstar cities” over the past few decades. Housing values are rising fastest in places like Austin and Phoenix and slowest in San Francisco, which led the United States in 2016.
Nationwide, the average home value in zip codes that people moved from was about $ 419,000, compared to an average home value in destination postal codes of about $ 392,000. This means the average mover slid down the price ladder by about $ 27,000. When the moving companies moved in 2019, the average home values in their destinations were only about $ 3,400 lower than when they started out.
The trend in 2020 of moving to more affordable locations than in previous years has been seen in almost all types of moves in urban, suburban and rural areas. People leaving urban zip codes moved to areas that were $ 66,000 cheaper in 2020, down from an average of about $ 26,000 less over the past four years. Those leaving suburban ZIPs moved down about $ 23,000 on the price ladder, compared to an average decline of just over $ 500 over the past four years.
Even those leaving rural areas for urban or suburban areas where prices are higher have only gone up about $ 31,000 this year, up from about $ 41,000 in recent years.
“We have been feeling the effects of this charged market since the second half of 2020. These migration patterns challenge the moving industry to put capacity in the right places. As you would expect, we end up with a lot of trucks in the low cost areas people are moving to and fewer trucks in the high cost areas where demand is high, ”said Kevin Murphy, vice president and general manager of North American Van Lines manager .
Immigration to less urban areas has accelerated slightly in 2020 compared to 2019, while moves to denser areas have declined – which is not to say that early pandemic fears of urban evacuation have been confirmed. The number of households that moved out of urban areas did not increase significantly in 2020. Additionally, Zillow’s Urban-Suburban Report found that despite some narratives from the early pandemic era, suburban housing markets did not grow disproportionately at the expense of urban areas in 2020.
The largest decrease in the proportion of moves between area classes was from suburbs to cities, which decreased 1.5% year over year. The strongest increase was recorded for moves to the suburbs in the country, with an increase of 1.2% compared to the previous year.
San Jose saw the most extreme changes in average home value for both those moving to and from zip codes within the subway, followed by San Francisco and Los Angeles. Those who moved out of San Jose went to a zip code with an average home value of nearly $ 1.2 million, while those who moved saw about $ 1.4 million more homes than where they came from.
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