Sun Belt cities last year drew massive waves of migrants, supercharging increases in rents and home prices ahead of the national average.
The affordable home costs that initially attracted transplants have swelled with the influx of new residents, presenting a threat to affordability in the markets, according to a report from Redfin.
Migration encouraged by remote work policies is a “cultural shift is here to stay,” said Redfin deputy chief economist Taylor Marr. However, the affordability that made the cities appealing migration destinations is changing rapidly.
“Some locals, particularly renters who aren’t able to take advantage of rising home values, are getting priced out of places like Phoenix and Austin as the cost of housing and other goods and services go up,” Marr said.
Phoenix was the nation’s hottest market for migration in 2021, reaching a 28 percent year-over-year increase in home prices and 26 percent hike in average monthly rent for new leases. Dallas ranked second in net inflow, with a 20.3 percent jump in home prices from last year and a 28.5 percent jump in average rent.
The Arizona metro led the nation with the addition of more than 85,000 people, which may prove to be both a blessing and a curse.
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The median home price was $435,000 in December, still about half of some major markets like Los Angeles. Prices are getting increasingly less friendly, as the median sale increased 28 percent year-over-year, well above the national increase of 15 percent year-over-year.
Phoenix has also seen major jumps in rent and inflation, with the latter notching the second-highest in the country. That puts the city at risk of seeing a drop in the future; the number of homes for sale, for example, fell 18.6 percent year-over-year.
Other notable cities to rank in Redfin’s top ten for net inflow include Tampa, which finished fifth, and Austin, which finished sixth. In Tampa, home prices rose 24.3 percent from last year and average rent rose 28.1 percent, while homes for sale dropped by 8 percent. In Austin, home prices soared 30.3 percent and average rent increased a staggering 39.9 percent, while homes for sale fell 6.5 percent.
“I recently had a couple looking for a 2,000-square-foot home anywhere in the Austin area for under $300,000,” said Redfin agent Barb Cooper. “I had to tell them it doesn’t exist.”