By VIRGINIA K. SMITH
U.S. cities that have seen the largest influx of new residents over the course of the pandemic now also have the highest inflation rates, according to a report from Redfin released Tuesday.
“A place’s popularity has a big impact on how much its local prices go up,” Redfin deputy chief economist Taylor Marr wrote in the report. “An influx of people moving into a place like Phoenix or Tampa [Florida] 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.”
All told, four U.S. metros experienced double-digit year-over-year inflation in the second quarter, with an 11.3% increase in the price of goods and services in Phoenix, a 10.9% increase in Atlanta, a 10.6% increase in Tampa, and a 10% increase in Miami.
Each one of those cities was also among most popular destinations for Redfin users looking to migrate, according to the report. (Miami was the most popular destination for relocation in the second quarter, followed by Tampa and Phoenix, according to a recent migration report from Redfin. Atlanta was the 12th most popular destination.)
By comparison, cities that saw a significant outflow of residents during the pandemic now have relatively low rates of inflation. San Francisco had the lowest rate of inflation, at 5.6%, followed by New York, at 5.9%.
Housing costs appear to have an outsized effect on overall inflation numbers. Phoenix housing prices rose by close to 16% year-over-year in June, while housing costs in Atlanta rose by 11% in the same period, making housing in both cities the second biggest inflation driver behind transportation.
“It’s getting more difficult for locals to afford daily expenses, especially when you consider that wages aren’t rising as quickly,” Mr. Marr wrote. “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.”
Overall housing costs increased by just 3.8% in San Francisco, however, and 4.2% in New York, making them a comparatively small factor driving inflation compared to costs for food, medical care and transportation.
This article first appeared on Mansion Global.