Phoenix, Tampa and Atlanta are seeing some of the highest inflation rates in the country as the areas attract a surge of homebuyers, according to Redfin.
Redfin deputy chief economist Taylor Marr said inflation, which surged 8.5% over the past year, is “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.”
According to Redfin’s migration data, Phoenix has become the second-most popular destination for homebuyers looking to move to another metro within the first three months of the year.
MIGRATION FROM BIG CITIES BOOSTS HOUSING PRICES IN SMALLER MARKETS
During that same time, the cost of goods and services in the area rose 10.9% compared to a year ago, which is the highest inflation rate of the metros tracked in Redfin’s latest analysis.
Atlanta was the 10th-most popular migration destination at the beginning of 2022, according to Redfin’s data. However, during that time, the area faced the second-highest inflation rate with prices rising 10.6% compared to a year ago, according to Redfin’s data.
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Tampa was the third-most popular destination, and it had the third-highest inflation rate with prices rising 9.9% compared to a year ago.
By contrast, San Francisco, New York and Washington, DC, topped the list of metros where the most homebuyers left during the first quarter.
San Francisco saw the most homebuyers leave, although the area’s inflation rate was approximately half that of Phoenix, Tampa and Atlanta at 5.2%, according to the technology-powered brokerage.
New York was close behind San Francisco, landing at No. 3 on the list. However, it had the second-lowest inflation rate at 5.4%, according to Redfin.
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Marr said it’s important to build new homes in these areas to help ease the competition for homebuyers.
“That’s especially important as everyday costs like paying rent and buying food becomes more burdensome,” she said.
Inflation has even outpaced pay raises, making it even harder to pay for these necessities.
“In Atlanta, for instance, wages are up about 7% from a year ago, but inflation is up 10% and asking rents are up 22%,” Marr said. “It’s becoming more difficult to save for a down payment and break into homeownership even before you factor in sky-high home prices and rising mortgage rates.”