The number of people who want to move to more affordable metro areas reached a record, as home prices, living costs, and mortgage rates pushed them out of the market in the second quarter. However, data show that the most attractive places for homebuyers have the highest inflation rates in the whole country.
Ever since the pandemic opened up the possibility of working from home, people have realized that living in an expensive coastal metro has no sense financially. Los Angeles, San Francisco, and New York had a big driving force of migration because they were job centers. Nowadays, the weight of that force has lost a part of its impact.
People actively search for less expensive places like Miami, Tampa, Sacramento, Phoenix, and Las Vegas. This is causing these places to have the highest inflation rates nationwide, as newcomers’ demand ramps up prices of products and services.
Redfin reported that the second quarter of 2022 brought a record share of homebuyers looking to relocate from a more expensive area to a relatively affordable one. More than 32.5% of Redfin users wanted to move from places with high rents and living costs, which are only getting worse with inflation. Most of those homebuyers wanted to move out of these 10 metro areas:
1. San Fransico
2. Los Angeles
3. New York
4. Washington DC
San Francisco, the most expensive city in the US, has increased migration in the last two quarters. This is not the case for New York, where the outflow has slowed down since the pandemic stopped being a major factor in people’s lives. It seems like people are not looking to move out of New York as much now that everything has come back to normal.
On the other hand, people who are already living in places with a low cost of living need to adjust to the rising prices caused by a huge inflow of income and demand. Top of the list of the most attractive places to homebuyers is reserved for:
5. Las Vegas
6. Cape Coral
7. San Diego
8. North Port
9. San Antonio
Migration hotspots show net inflow in the last two years, and this quarter wasn’t any different. Most of the homebuyers looking to relocate are looking for an out-of-state destination, but some places in California have a huge inflow of people from LA and the Bay Area. San Diego and San Antonio have an increasing net inflow than a year ago.
The places with the highest and lowest inflation rates match those with the country's biggest net inflow and outflow. The highest inflation rate is noticeable in Phoenix, AZ, where the overall cost of living increased by 11.3%. The lowest inflation in all of the US is in San Francisco, where prices only went 5.6% up but were very high in the first place.
Twelveth on the list of the most popular migration hotspots is Atlanta, but that place is second on the list of the highest inflation. The prices in Atlanta have gone 10.9% up year over year. The same period of time increased New York prices by 5.9%
Tampa and Miami, major hotspots in Florida, have their prices revised by more than 10%, and the biggest inflation driver is housing costs.
Locals are struggling to meet the standard of newcomers, who have higher salaries, more cash, and more options to choose from. Meanwhile, the average salary has not increased at the same pace as the prices. The locals are out in an unenviable position, having to enter bidding wars or live outside their means.
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