If you’re contemplating following the migration trends and heading for a Sun Bely state, you may want to reconsider your cost of living budget.
According to new data out from Redfin, the cities with the highest migration rates are also serving the largest inflation rates in the U.S.
In Phoenix, the second-most popular destination for buyers looking to move from one metro to another, prices of goods and services have risen 10.9 percent year-over-year, the highest inflation rate of the metros in Redfin’s analysis.
Tampa, no. 3 on the migration list, also has the nation’s third highest inflation rate, with prices up 9.9 percent. Atlanta, also a popular migration destination, has the country’s second-highest inflation rate at 10.6 percent.
“Not everyone in the country is experiencing inflation the same way,” said Redfin Deputy Chief Economist Taylor Marr. “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. We need to build more new homes in these Sun Belt hot spots to ease some of the competition for local homebuyers. That’s especially important as everyday costs like paying rent and buying food become more burdensome.
“In Atlanta, for instance, wages are up about 7 percent from a year ago but inflation is up 10 percent and asking rents are up 22 percent,” Marr continued. “That means 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.”
San Francisco, on the other hand, which has one of the largest outflow rates also has the lowest inflation rate in the U.S. According to Redfin, San Francisco’s inflation rate stands at 5.2 percent—roughly half that of Phoenix, Tampa and Atlanta.
New York, with the second-lowest inflation rate of 5.4 percent, has the third highest outflow rate, followed by Washington, D.C, which has the third-lowest inflation rate at 6.7 percent. Los Angeles, also a popular metro area to move out of, has an inflation rate in the middle of the pack at 7.8 percent.
“The good news is that because most families own their home, they’re building wealth from rising home values, even if they are paying more for everything else,” Marr said. “There’s also a bright spot for prospective buyers: I expect competition to slow down in the coming months as mortgage rates rise and some buyers back out of the market, and wage gains are likely to continue increasing.”