Denver and Seattle See Rising Out-Migration as Home Prices Soar, Redfin Data Shows

Based on an analysis of over one million users, Redfin data from the first quarter of 2018 indicates a significant shift: Denver and Seattle are experiencing a net outflow of residents for the first time, signaling that these once-booming markets may be reaching an affordability ceiling. This trend, a forward-looking indicator of population change, suggests that homebuyers are increasingly searching for more affordable alternatives, with cities like Phoenix emerging as top destinations. The primary driver is a staggering rise in home prices—up 64% in Denver and 76% in Seattle over five years—which is pushing residents to seek less competitive markets.

What Does a "Net Outflow" of Redfin Users Mean?

A net outflow occurs when the number of users in a specific metropolitan area searching for homes in other metros exceeds the number of users from elsewhere looking to move into that area. In the first quarter of 2018, 20% of Denver-based Redfin users were looking to relocate, up from 15% a year earlier. This metric is a leading indicator of migration patterns, as seen in the San Francisco Bay Area, where increased outward searches in 2015 preceded a documented population loss in 2016.

Why Are Homebuyers Leaving Denver and Seattle?

The core issue is affordability and market competition. Over the past five years, home price growth in these cities has more than doubled the national average of 37%. This rapid appreciation, combined with their status as two of the fastest housing markets in the country, has created a highly competitive environment for buyers.

• Median Home Sale Price (April 2018): Seattle: $580,000 | Denver: $415,000
• National Comparison: Phoenix, a top destination, had a median price of $257,000.

This significant price differential is a major motivator for relocation. Furthermore, cities like Seattle have been grappling with policy issues related to the housing crisis, which may contribute to buyer uncertainty.

Where Are People Moving To?

Homebuyers from Denver and Seattle are primarily targeting areas with lower costs of living and less competition. The most common destinations fall into two categories:

1. Clearly More Affordable Metros: Phoenix was the top destination for both groups of outgoing buyers, showing a 34% year-over-year increase in net inflow. Other attractive cities include major Texas metros, Chicago, and Portland.
2. Affordable Sub-regions within Expensive Metros: While Los Angeles appears to be an exception due to its high average cost, the data shows buyers are focusing on more affordable counties within the LA market, such as Riverside County (the Inland Empire).

This migration pattern results in a disbursement of wealth and is likely to spur economic growth and rising home prices in the receiving cities.

What Does This Trend Mean for the Future of Housing Markets?

Based on the search data, we can expect cities with the highest net inflow of users—such as Las Vegas, Atlanta, and Austin—to experience similar growth pressures. The key to maintaining affordability in these destinations will be housing supply expansion. Cities that build enough new housing units to accommodate the influx, like Las Vegas and Austin, may better dampen cost growth. Conversely, markets like Sacramento and San Diego, which have seen net inflows slow, may not be expanding housing supply as rapidly.

Practical advice for buyers in these shifting markets includes:

• Research emerging markets early if you are priced out of major hubs.
• Look at county-level data within a metro area to find more affordable sub-markets.
• Understand that rising interest from inbound buyers can quickly heat up a local market, so be prepared for competitive conditions.