Inflation is highest in these pandemic boomtowns
Four U.S. metros experiencing some of the highest inflation rates in the country are pandemic-era boomtowns where remote workers migrated for more affordable housing, according to a new report.
An analysis by the real estate company Redfin showed that Phoenix, Atlanta, Miami and Tampa, Fla., saw double-digit inflation in the third quarter, compared to a nationwide inflation rate of 8.3 percent.
Phoenix, the sixth most popular pandemic-era boomtown among Redfin users in the third quarter, experienced the largest increase in the cost of goods and services, according to the analysis.
The analysis found that the inflation rate in Pheonix has soared from pre-pandemic levels, rising from 3 percent in 2019 to 13 percent last quarter. Shelter costs alone in Phoenix rose by 19 percent in August.
Phoenix was followed by Atlanta and Tampa, with inflation rates at 11.7 percent and 10.9 percent respectively. Atlanta was ranked 15th on Redfin’s list of popular migration spots and Tampa fourth.
Miami, the second most popular migration destination, had a third-quarter inflation rate of 10.7 percent.
Redfin economists said the outsized inflation rates in these pandemic boomtowns were caused by the influx of buyers into these markets, which caused home prices to spike and drive up inflation.
“The pandemic triggered a great rebalancing of affordability,” Redfin deputy chief economist Taylor Marr said in a media release.
“Americans left pricey coastal job centers and moved to more affordable places in the Sun Belt, but now those more affordable places are seeing affordability erode faster than anywhere else in the country,” Marr added.
San Francisco, where shelter costs increased by 2.1 percent in August, had the lowest inflation rate among metros analyzed by Redfin, at 5.7 percent.
But a new report released by the Labor Department on Thursday showed inflation fell nationwide last month.
Consumer prices slowed in October, and the annual inflation rate fell to 7.7 percent, according to the consumer price index (CPI).
Shelter, which accounts for about 40 percent of the CPI, rose by 0.8 percent last month, marking a 6.9 percent increase since last year.
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