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16 ers are coming from. I helped one client buy a home in Washington State in 2016, and it has doubled in value. She sold that home last year and used the proceeds to buy a much bigger, nicer house in Phoenix." SUN BELT CITIES ARE THE MOST POPULAR DESTINATIONS FOR RELOCATORS After Sacramento and Las Vegas, Miami was the most popular migration destination in Q4. It's followed by Tampa and Phoenix. Popularity is determined by net inflow. Although home prices have soared in popular destinations like Las Vegas and Phoenix since the start of the pandemic as remote workers have moved in, they're still far more affordable than places like the Bay Area or New York. e typical home in eight of the 10 most popular destinations is less expensive than the typical home in the most com- mon origin. For example, Sacramento's $540,000 median sale price is significantly cheaper than $1.4 million in San Francisco, the top origin of out-of-towners coming to Sacramento. (Cape Coral, Florida and North Port-Sarasota, Florida, with Chicago as the top origin, are the exceptions). Warm weather is also attractive to relocators; all 10 of the top destinations are known for their sunny climates, and five are in Florida. HOMEBUYERS ARE LEAVING EXPENSIVE COASTAL JOB CENTERS More homebuyers looked to leave San Francisco than any other metro in Q4, fol- lowed by Los Angeles and New York. e ranking of places homebuyers are moving away from is determined by net outflow, a measure of how many more people are looking to leave a metro than move in. Washington, D.C. and Chicago round out the top five, followed by several other large northern job centers. ose are typi- cally the places homebuyers looked to leave, as they tend to be expensive. Fewer homebuyers are leaving most of those places than there were a year earlier, reflecting the slow housing market. e net outflow from seven of the top 10 metros was smaller in the fourth quarter than a year earlier. HOUSING MARKET POTENTIAL DROPS 17% YOY Closing out 2022's housing market po- tential data, the year ended on a two-month upswing, increasing 3% over November. Despite this increase, housing market potential remained down 17% compared with year-end data from December 2021. is news comes by way of Mark Fleming, the Chief Economist for First American Finan- cial Corporation and Leader of the Decision Sciences team, who overall found that the 17% drop in potential from 2021 is the equivalent of 1,065,000 sales that did not happen. "e steep annual decline in market poten- tial was largely a result of higher mortgage rates, which prevent both buyers and sellers from jumping into the market," Fleming said. "While rates remain significantly higher compared with one year ago, they have retreated for two consec- utive months, improving affordability. However, although lower mortgage rates have helped improve affordability, housing supply remains limited, and you can't buy what's not for sale." Compared to November 2022, the average 30-year fixed rate mortgage dropped 0.5%, boosting home-buying power by $16,000, equivalent to an increase of 87,000 home sales. Year-over-year, home-buying power is down $141,000 based on current figures. Mortgage applications, which are a leading indicator of home sales, have also increased over the last two months as mortgage rates have softened. "From a financial perspective, the deci- sion to buy a home comes down to a pay- ment-to-paycheck calculation, and lower rates may help to reduce the mortgage payment while higher incomes can increase one's monthly paycheck," Fleming said. e market's limiting reagent seems to be inventory, which is still down historically, and buyers' fear of not finding something to buy. As of the third quarter of 2022, 93% of outstanding mortgages have a rate at or below 6%, leaving existing homeowners in a position where it would cost more to borrow the same amount of money they owe on their current mortgage, preventing them from listing their home for sale and adding supply to the market. As a result of these dynamics, the average length of time that homeowners remain in their homes reached a historic high of 10.62 years in December, reducing housing market potential by 9,600 sales compared to the previous month. "While existing-home inventory remains limited, the silver lining for home buyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute," said Fleming. "e National Asso- ciation of Home Builders reported that nearly two-thirds of builders were offering incentives, including mortgage rate buydowns, paying points for buyers and price reductions, which could entice potential home buyers." e good news is that new-home inventory is on the rise, as is usual to see in the spring season, which will continue to prop up sales numbers. Continued from previous page Journal