Migration hotspots in the solar belt are home to the highest inflation rates in the country
Four U.S. metros saw double-digit inflation in the second quarter — Phoenix, Atlanta, Tampa and Miami — and all four were among the most popular migration destinations for Redfin.com users, according to a new Redfin report. a real powered by technology. real estate brokerage. These destinations have the highest inflation rates, in part because they are attracting many new residents and experiencing steep house price increases.
Phoenix saw prices for goods and services rise 11.3% year-over-year on average in the second quarter, the highest inflation rate among metros according to Redfin analysis. Phoenix was also the third most popular destination for Redfin.com users looking to transition from one metro to another, according to Redfin migration data.
Atlanta, the 12th most popular destination, had the second highest inflation rate at 10.9%, and Tampa (10.6%) ranked third for inflation and second for migration. Miami, the most popular destination, had the fourth highest inflation rate (10%).
The prices of goods and services are rising much more slowly in the metros as home buyers leave
Places where home buyers are leaving tend to have lower inflation rates. In San Francisco, which tops the list of metros Redfin.com users sought to leave in the second quarter, prices rose 5.6%. That’s the lowest metro inflation rate in Redfin’s analysis and half that of Phoenix.
New York had the second-lowest inflation rate (5.9%), and it’s number three on the list of places homebuyers are leaving. Los Angeles (8%), Washington, DC (7.1%) and Seattle (8.9%), which round out the top five metros shoppers leave, all have inflation rates near the middle of the pack.
“The popularity of a location has a big impact on how its local prices rise,” said Taylor Marr, deputy chief economist at Redfin. “An influx of people moving to a place like Phoenix or Tampa increases demand for everything from housing to food to fuel, driving up prices in all of those areas and ultimately contributing to overall inflation. This means that it is becoming more and more difficult for residents to pay for daily expenses, especially considering that wages are not rising as quickly. In Phoenix, for example, wages have increased by about 6 % from a year ago, but inflation is up over 11% and asking rents are up 24% Landlords are in a better position than renters as they benefit from the rise in value houses.
Housing costs are a bigger inflationary factor in popular migration destinations
Rising housing costs contribute more to inflation in migration hotspots than in places where homebuyers are leaving.
In Phoenix, for example, overall housing costs rose nearly 16% year-over-year in June, the second-highest inflation driver behind transportation. And in Atlanta, housing costs rose 11%, also the second-highest inflationary factor after transportation. Transportation includes fuel, which is a particularly notable inflationary factor in car-dependent places like Phoenix and Atlanta.
At the other end of the spectrum, housing costs rose 3.8% in San Francisco, a small inflation factor compared to food, medical care and other goods and services, in addition to the transportation. The story is similar in New York, where housing costs rose 4.2%, also a smaller increase than most other categories.
The share of homebuyers moving is at an all-time high, largely thanks to remote working making moving more feasible. Many homebuyers have moved from expensive coastal job centers to the relatively affordable Sun Belt metros, although their popularity has made many of these areas less affordable than before. Home prices in Phoenix have risen more than 60% throughout the pandemic, hitting $486,000 in May.
As house prices and other costs rise faster in popular migration destinations, the financial advantage of living in a place like Phoenix instead of the California coast may eventually diminish.