The analysis looked at over 40 million home sales in the United States in the past five years and found that buyers from out of town paid 7% more for a home than those buying from within their own city.
The difference in price can be partly attributed to the increasing demand from buyers outside of the local market. However, the study also found that there were certain metropolitan areas where this effect was more pronounced, such as Sacramento, California; Austin, Texas; and Seattle, Washington. In these cities, buyers coming from outside the area paid an average of 10-12% more for their new home.
In addition, the study found that the difference in price between out-of-towners and local purchasers varied based on the type of housing they were buying. Unsurprisingly, buyers from out of town paid the most for luxury properties—an average of 35% more than locals. On the flip side, buyers who purchased starter homes paid 22% less than local purchasers. This suggests that while out-of-town buyers may be willing to pay more than local ones, they are also more price-sensitive when it comes to lower-priced homes.
Taken together, these findings underscore the importance of understanding the local market when selling or purchasing a home. Buyers should consider whether they want to pay more for their home by going outside of their local area, and sellers should be aware of how attractive their property is to out-of-town buyers.
A recent study conducted by Zillow on the home-buying habits of out-of-towners revealed that buyers from outside the local market pay significantly more for their homes than local buyers. On average, out-of-towners were found to pay 7% above the market rate for the same home. This gap widened to 10-12% in select metropolitan areas such as Sacramento, Austin, and Seattle as well as when luxury properties were being purchased. Home sellers in these markets should take note of the increased demand from out-of-town buyers and keep it in mind when determining a list price.
On the other hand, out-of-town buyers were found to pay an average of 22% less than local buyers for starter homes. This suggests that despite being willing to pay more for certain homes, out-of-town buyers also tend to be price-sensitive when considering lower-priced properties. As a result, home sellers should take into account the relative value of their property to out-of-towners when setting a list price.
Overall, the study provides interesting insights into the changing dynamics of the home-buying market and the shifting preferences of out-of-town buyers. It shows that not only do these buyers often pay more for certain properties, but they are also becoming increasingly price-sensitive in certain areas. For home sellers and purchasers alike, understanding the local market and the preferences of out-of-town buyers can make a big difference in the final sale price.
This article was contributed on Oct 23, 2023