The Hottest Housing Markets During the Pandemic Also Have the Highest Inflation
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Sun Belt cities like Phoenix, Tampa and Dallas are among the hottest destinations for people looking to relocate. They’re also the cities with the highest rates of inflation in the country, according to a recent report from the real estate brokerage Redfin.
“Not everyone in the country is experiencing inflation the same way,” Redfin Deputy Chief Economist Taylor Marr said in the report. “It’s having an especially big impact in places like Tampa and Phoenix, which are attracting the most new residents and seeing double-digit increases in prices overall and even bigger increases in housing costs.”
The national inflation rate was 8.5% in March, but people in some parts of the country are being hit with much higher price increases than others. And the cities experiencing higher inflation are often those that are also receiving a big influx of new residents.
Of all the major cities included in the Redfin report, Phoenix saw the highest inflation rate, at 10.9%. Phoenix was also the second-most popular destination for homebuyers looking to relocate. The increased popularity comes at a cost: Home prices in Phoenix have risen more than 30% over the past year, according to data released this week by CoreLogic, compared to roughly 21% increase in prices nationally.
Atlanta had the second-highest inflation rate of 10.6% and was the 10th-most popular migration destination, while Tampa had the third-highest rate of inflation (9.9%) and was the third-most popular destination.
Those three cities, along with many others along the Sun Belt like San Diego and Las Vegas, saw a surge of new residents over the course of the pandemic thanks to their relative affordability, warm climates and the new flexibility afforded by remote work policies.
The influx of homebuyers has helped push home prices up at a faster pace than the rest of the country — and contributed to rising inflation, according to Redfin’s analysis.
Redfin says that as housing prices (and consumer prices in general) continue to rise, these cities will become less affordable compared to the big cities their new residents left behind. After all, these new residents not only have to cope with more expensive homes and soaring mortgage rates but also higher prices for everyday essentials like groceries and gas.
“There may come a point where it won’t make financial sense to move from coastal California to Phoenix or Atlanta,” Marr said, though that point may still be years away.
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