As demographics change, the local cost of living changes. The inflation rate in high-demand Tampa, for example, is growing faster than in many major U.S. cities.
SEATTLE – The four U.S. metropolitan areas with the highest inflation rates in the third quarter are migration hotspots, according to a report from Redfin: Phoenix, Atlanta, Tampa and Miami.
All four of those cities saw double-digit inflation – and they also ranked near the top of the list of most popular destinations for relocating homebuyers.
In No. 1 Phoenix, the price of goods and services rose 13% year-over-year on average, for the highest inflation rate among all U.S. metros, according to Bureau of Labor Statistics (BLS). It was also No. 6 in top destinations for metro-to-metro movers.
Top high-inflation metros
- Phoenix was the sixth-most popular destination for Redfin.com users looking to move from one metro to another in the third quarter.
- Atlanta, the 15th most popular destination for relocators, had the second highest inflation rate, at 11.7%.
- Tampa (10.9%) clocked in at number three for inflation and number five for migration.
- Miami had the fourth highest inflation rate (10.7%) and was the second most popular migration destination.
Nationwide, the inflation rate was 8.3% in the third quarter.
On the other hand, the lowest local inflation rates appear in places people are leaving. San Francisco prices rose just 5.7% in the third quarter – the lowest inflation rate among the metros Redfin analyzed – and the city was No. 1 on the list of metros people wanted to leave.
New York had the second-lowest inflation rate (6.4%) and was No. 3 on the list of metros people want to leave.
Inflation and migration are linked. Remote work allowed scores of Americans to move to Sun Belt metros during the pandemic in search of affordability and warm weather, which drove up housing prices, a key contributor to inflation. It’s why migration hotspots now have the highest inflation rates – a trend that was much less acute before the pandemic. In 2019, for example, Los Angeles had the second highest inflation rate but was losing residents.
“The pandemic triggered a great rebalancing of affordability,” says Redfin Deputy Chief Economist Taylor Marr. “Americans left pricey coastal job centers and moved to more affordable places in the Sun Belt, but now those more affordable places are seeing affordability erode faster than anywhere else in the country.”
Marr thinks those higher rates of inflation could start to deter relocating buyers, and “some of these areas may lose their titles as top migration destinations in 2023 as a result.”
Housing costs a big inflation driver
The increase in housing costs is a bigger contributor to inflation in migration hotspots than in the places homebuyers are leaving. In Phoenix, for example, shelter costs rose 19% year-over-year in August and were a top influence on the city’s overall inflation rate of 13%. Food was also a major contributor with prices up 14.1%.
At the other end of the inflation spectrum, San Francisco only saw shelter costs increase 2.1% year-over-year, one of the smallest inflation drivers. Fuel, transportation and food were much bigger contributors to the region’s overall inflation rate of 5.7%.
Inflation rate variance hits record high
Costs always went up (or down) at different rates metro-to-metro, but the current situation is unique – the most extreme level on record according to Redfin’s economists because so many places surged in popularity (added residents) during the pandemic while others plummeted in popularity.
The typical variability in the inflation rate among the metros Redfin analyzed in the third quarter was 1.8 percentage points, up from 1 percentage point a year earlier and a pre-2020 average of 0.8 percentage points.
© 2022 Florida Realtors®
©Florida Realtors®
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