Highlights from this report:
- Sacramento and Seattle are top destinations for home buyers leaving the pricey San Francisco metro area.
- Many have been priced out of the San Francisco Bay Area housing market in recent years.
- The Sacrament and Seattle real estate markets are more affordable by comparison.
Earlier this year, the real estate brokerage Redfin published an updated version of its “Migration Report.” This report uses search data from the Redfin property listing website to identify various trends relating to the housing market, home buying, etc.
One of those trends: Many people who live in the San Francisco area are looking to Sacramento and Seattle, for more affordable housing options.
Buyers Priced Out of San Francisco Housing Market
The company’s latest report showed that a lot of folks are leaving the San Francisco metro area, and seeking to buy homes elsewhere.
In fact, among the 87 metro areas included within this particular report, San Francisco ranked first in terms of “net outflow” during Q4 2018.
In this context, “net outflow” is the number of people who are looking to leave a metro area, minus the number looking to move into it. When a net outflow exists, it means there are more people looking to leave an area than move into it. A net inflow means the opposite — more people are looking to move in than leave.
According to the report:
“In San Francisco, New York, Denver and Washington, D.C., outflows were up dramatically from a year earlier. Of all San Francisco Bay Area residents using Redfin, 24 percent were searching for homes in another metro, up from 19 percent during the same time period a year earlier.”
Of those Bay Area residents who were looking to buy a home elsewhere, the top in-state destination was Sacramento. The top out-of-state destination was Seattle, Washington.
The table below (created by Redfin) shows the metro areas with the highest net outflow during the fourth quarter of 2018. It also compares those figures to the same period a year earlier. You can see that the San Francisco metro area had the highest outflow, and that it increased over the previous year.
Many Are Looking to Seattle and Sacramento
Home prices within the San Francisco Bay Area housing market have risen sharply over past few years. And while they have slowed down quite a bit, they are still inching upward.
According to the real estate information company Zillow, the median home value within San Francisco reached $1.3 million earlier in 2019. The median price point for the broader San Francisco-Oakland-Hayward metropolitan area was around $950,000 as of April 2019.
In contrast, home prices in Sacramento and Seattle (the top in-state and out-of-state destinations, respectively) tend to be lower than those found within the Bay Area housing markets.
The median home value for the Seattle-Tacoma-Bellevue metro area was $492,000 as of March 2019. (That figure is skewed downward by the relatively affordable housing markets of Tacoma, Kent, etc. Bellevue and Seattle are much pricier by comparison.)
Sacramento, in particular, is a much more affordable real estate market when compared to the Bay Area. The median home value in that city was around $327,000 as of March 2019. Prices are cooling there as well, but the inventory situation could present a challenge for relocating home buyers.
According to the latest real estate industry reports, the Sacramento metro area had less than a 2-month supply of homes for sale as of March 2019. According to most economists, a “balanced” housing market has closer to a 5- or 6-month supply. So the real estate scene in Sacramento is pretty tight right now, in terms of inventory.
Of course, the Seattle and San Francisco housing markets are also experiencing supply shortages right now. It’s a common condition in these western markets. So West Coast home buyers are probably accustomed to it.
It’s most likely the price factor, more than anything else, that is driving so many San Francisco-area residents to shop for homes in other housing markets.
Construction Booming in Seattle Area
Population growth (partly fueled by the California “exodus”) has increased housing demand across the Seattle metro area. And this in turn has led to an ongoing boom in residential construction. The real estate market there seems to be shifting to favor buyers.
In a February 2019 article for The Seattle Times, Mike Rosenberg wrote:
“Even several years into Seattle’s record development boom, the building just won’t stop. And there’s no clear sign that it will slow down anytime soon. There are 66 major projects underway now in the central part of the city … up from 65 six months prior…”
The “Housing Growth Report” maintained by the city’s Office of Planning and Community Development showed there were 17,904 housing units under construction, as of April 2019. Since 2015, more than 28,000 units have been built.
At that pace, there might someday be room for all of those California transplants.