Four U.S. metros experienced double-digit inflation in the second quarter — Phoenix, Atlanta, and Tampa and Miami, Fla. — and all four were among the most popular migration destinations, according to Redfin users.
Specifically, these four areas are enticing a plethora of new residents and therefore are experiencing sharp home-price increases. The overall share of homebuyers relocating is at a record high, which is attributed to remote working options. Redfin’s data found that homebuyers are able to relocate from expensive cities to suburbs with new work-from-home options.
Phoenix saw prices of goods and services rise 11.3% year over year on average in the second quarter, the highest inflation rate of the metros in Redfin’s analysis. Phoenix was also the third-most popular destination for Redfin users looking to move from one metro to another.
Overall housing costs in Phoenix rose nearly 16% year over year in June, the second-biggest inflation driver behind transportation. Additionally, Phoenix home prices have risen more than 60% throughout the pandemic, reaching $486,000 in May
Atlanta, the 12th-most popular destination, had the second highest inflation rate at 10.9%, and Tampa clocked in at No. 3 for inflation at 10.6%. Miami, the most popular destination, had the fourth-highest inflation rate at a whopping 10%.
The places homebuyers are fleeing from, however, tend to have lower inflation rates. In San Francisco, prices rose 5.6%, the lowest inflation rate of the metros in Redfin’s analysis and half that of Phoenix.
New York had the second-lowest inflation rate at 5.9%, and it ranks No. 3 on the list of places homebuyers are leaving. Los Angeles, Washington, D.C., and Seattle, which round out the top five metros homebuyers are leaving, all have inflation rates near the middle of the pack.
“A place’s popularity has a big impact on how much its local prices go up,” said Redfin Deputy Chief Economist Taylor Marr. “An influx of people moving into a place like Phoenix or Tampa pushes up demand for everything from housing to food to fuel, which pushes up prices in all those areas and ultimately contributes to overall inflation.
"That means it’s getting more difficult for locals to afford daily expenses, especially when you consider that wages aren’t rising as quickly," Marr continued. "In Phoenix, for instance, wages are up about 6% from a year ago, but inflation is up more than 11% and asking rents are up 24%. Homeowners are in a better position than renters because they benefit from rising home values.”
