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New data from Redfin confirms that out-of-staters have a particularly keen focus on Austin. Based on users’ data, Redfin determined that nearly 40% of all people shopping for housing in Austin are coming from outside of the metro. Austin ranked in the top five most popular places for people to move in May. It also had the largest increase in home prices of all the largest U.S. metros.

The largest feeder region for Austin — by a long shot — is the Bay Area at 19.3%. Chicago and Los Angeles each yielded about 9% of the total out-of-state traffic.

But despite the influx, buyers can still get three houses in Austin for the price of one in San Francisco, where the average home sells for about $1.1 million more than a comparable one in Austin.

This gulf in cost of living between Austin and San Francisco has gotten incrementally smaller in the past year, as housing prices in Austin break records every month. At the same time, San Francisco housing prices were declining steadily until March of this year, when they began to climb once more. In May, median housing prices in San Francisco reached a four-year high of $1.8 million, according to BayAreaMarketReports.com.

How quickly are house prices rising?

Redfin Chief Economist Daryl Fairweather said Austin isn’t likely to become as expensive as San Francisco, though. It’s more likely to become almost as expensive as Seattle, where Amazon and Microsoft are headquartered.

“What Austin has going for it that a place like Seattle struggles with is that there’s just more land in Austin, more areas to expand to,” Fairweather said. “You might see Austin kind of grow into this mega city like Los Angeles, where it’s sprawling.”

She and several other experts said this critical distinction — space to breathe — will likely keep Austin from becoming as expensive as the major coastal cities it’s often compared to. Fairweather said the current price spike in Austin is more likely a short-term shock, backing up the assertion of many locals that Austin is experiencing a historic but sustainable housing reset as it moves into the big-city category.

On the ground in Austin, this growth is easier said than done. The city’s land development code — which determines how the city is built out — was written for the most part in the 1980s. As some city officials, including Austin Mayor Steve Adler, call for changes to the code, the issue remains somewhat of a third rail, hindering Austin’s ability to build denser and bring on bigger buildings that would yield more housing closer to where people work.

The pandemic-inspired moving itch isn’t singular to the Austin metro, though. Redfin’s national data showed a “pretty large uptick” during the pandemic, Fairweather said. Before Covid-19 pushed people out of offices and into work-from-home environments, about 27% of Redfin users were looking to leave their metro area. That jumped to 31% during the pandemic.

The pipeline of people moving from the Bay Area to Austin is not new, either. The Austin metro area has been a hot destination for people leaving San Francisco and the surrounding areas since Redfin began tracking the data in 2017.

But Austin certainly is becoming more of a destination. For years, it was the sixth most popular place for people to move from the Bay Area. At the beginning of 2021, it leapt to third place.

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Sairam Kota

Sairam is an experienced multifamily deal sponsor and asset manager for 738 units, a key principal in 332 units and limited partner in 1000 units. He has a strong experience in asset management, property reposition, income generation, implementing operational efficiencies and cost reduction. Sairam is a licensed Real Estate Broker in the state of Texas. He is a successful IT Consultant with 20+ years of experience in corporate America.