This City Has Become One of the Most Popular Destinations for Home Buyers. Here's Why

According to a recent report by Redfin, there's quite a bit of relocation going on in the United States. People are leaving cities like San Francisco, New York, and Los Angeles in large numbers and are heading for warmer climates and lower housing costs.

While some destinations are seeing a great deal of net inflows of new households, the city that topped the list in the second quarter of 2023 is none other than Las Vegas, Nevada.

People are downsizing their housing costs, not their lifestyles

Las Vegas has become a popular relocation destination for a few reasons, but the most likely factor is home affordability. With mortgage rates more than double where they were in early 2022 and home prices spiking higher compared with pre-pandemic levels, affordability has become a much larger factor when people are deciding where to live.

In the case of Las Vegas, consider that the top three markets home buyers are choosing to move away from are Los Angeles, San Francisco, and Seattle. And all three are very expensive.

For example, the median home sale price in San Francisco is over $1.4 million and the median mortgage payment is $9,281 based on a 6.7% rate on a 30-year fixed mortgage. Simply put, many people can't afford that. In both Los Angeles and Seattle, home prices are more than double what they are in Las Vegas.

In Las Vegas, the median home sale price was $412,000 in June, according to Redfin's data, which translates to a far more affordable monthly payment of $2,721.

So, for first-time buyers who had been renting in one of those markets, Las Vegas is a much more affordable place to buy a first home. And for people who owned a home in one of those markets and are now relocating, now could be a smart time for them to sell at an elevated price and roll the proceeds into a more affordable home in Las Vegas.

Other reasons why Las Vegas tops the list

Beyond the affordability factor, there are a few other likely reasons why Las Vegas has become such a popular destination:

• The availability of remote work has surged, and that's especially true for companies based on the West Coast. This means more people are able to work from wherever they want.
• Las Vegas is within driving distance of the major California cities. There are other affordable markets in the United States, but Las Vegas allows people to live in a major metropolitan area without moving too far away.
• Las Vegas has a warm climate. Of the top 10 cities people are relocating to, all of them are in warm areas. For example, Tampa and Orlando are both on the list, and the top market people are relocating from is the New York metro area.

This could be a sustained trend

As a final thought, it's important to note that people aren't just starting to leave expensive cities in favor of lower-cost areas with nice weather. In fact, the net inflows to the Las Vegas area are actually lower than they were in the second quarter of last year, and that was before the worst of the mortgage rate increases worked their way into the market. All 10 of the cities on the new list also had positive net migration a year ago. So, this is a continuation of a long-tailed trend and could potentially last for years to come.

Having said all that, although Las Vegas is an affordable and warm place to live, that doesn't mean it's a great fit for you. If you're looking for a new place to live, be sure to explore a few cities that have characteristics that matter to you before making a decision.