The housing market’s impressive strength in 2020 paired with a pandemic-induced motivation to move helped sellers cash in on quickly rising home values to find places that better suit their needs—specifically, bigger homes in less-expensive areas.
According to a new Zillow® analysis of moving data from northAmerican® Van Lines, Americans who made out-of-town moves last year typically paid less money for larger houses. Movers went to zip codes where sold homes are 33 square feet larger on average than where they came from, a significant jump from the 9-to 21-square-foot step-up movers have taken in recent years.
Zillow’s recent Mover Report found the top metros for net in-migration, with more people moving in than out, are sunny and relatively affordable. Phoenix, Charlotte and Austin led the U.S. in terms of net in-migration.
According to Zillow, the findings are further evidence of the “Great Reshuffling” that began when homeowners, formerly tied to the physical location of their employers, began working remotely. While suddenly spending more time than ever at home, people reevaluated how and where they wanted to live—a larger house with an office or chef’s kitchen, or a home with lower monthly payments in sunny Arizona, became extremely alluring.
Dropping interest rates fueled the hot housing market and boosted shoppers’ buying power, sending home appreciation skyrocketing in 2020. According to Zillow data, typical home values were up 8.4% ($20,716) over the course of 2020, compared with 3.7% growth ($8,791) in 2019.
As people move away from the priciest cities and toward more affordable ones, prices will also increase in those destinations. It may also spread out some of the consumer spending, tax revenues and job growth that have been increasingly concentrated in “superstar cities” over the last few decades. Home values are rising fastest in places like Austin and Phoenix, and most slowly in San Francisco, which led the U.S. in appreciation as recently as 2016.
Nationwide, the average home value in zip codes people moved from was about $419,000, compared to an average home value in destination zip codes of about $392,000. This means the average mover was sliding down the price ladder by about $27,000. When movers relocated in 2019, average home values in their destinations were only about $3,400 less than where they started.
The trend in 2020 to move to more affordable places than in years past was seen across nearly every type of move between urban, suburban and rural areas. People leaving urban zip codes moved to areas that were $66,000 cheaper in 2020, versus an average of about $26,000 cheaper in the previous four years. Those leaving suburban zips moved about $23,000 down the price ladder, compared to an average decrease of just over $500 the previous four years.
Migration to less urban areas picked up slightly in 2020 compared to 2019, while moves to more dense locations ticked down, which is not to say that early pandemic fears of an urban exodus have been borne out. The number of households that moved out of urban areas did not significantly rise in 2020. According to Zillow’s Urban-Suburban report, suburban housing markets did not disproportionately strengthen in 2020 at the expense of urban areas.
