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Home buyers in the Sun Belt may be seeing some of the toughest increases in home prices as growing numbers of out-of-towners embrace the region. Cities like Phoenix, Tampa, Fla., and Atlanta are popular destinations for relocations, and as a result, home prices across the region are posting rapid increases.
While many Sun Belt metros are still relatively affordable, more competition from new residents and high inflation are both pushing the cost of living higher.
With inflation at a 40-year high, the average consumer is spending $500 more a month on living expenses than a year ago. House hunters would be smart to search for a home that is about $40,000 cheaper than they would have a year ago as a result of the rising costs, according to a new analysis by the National Association of REALTORS®.
Buyers in Tampa, Fla., need to earn $67,353 annually to afford the metro’s typical monthly payment of $1,684—up nearly 48% compared to a year ago. That is the biggest jump compared to any other U.S. city, according to a new analysis from Redfin.
In other Sun Belt cities, buyers are finding they need to earn considerably more this year than last year too—40% or more, such as in Phoenix; Las Vegas; Orlando, Fla.; Jacksonville, Fla.; Nashville, Tenn.; Austin, Texas; Fort Worth, Texas; Anaheim, Calif.; Dallas; Atlanta; Charlotte, N.C.; and San Diego.
“Housing is significantly less affordable than it was a year ago because the surge in housing costs has far outpaced the increase in wages, meaning many Americans are now priced out of homeownership,” says Taylor Marr, Redfin’s deputy chief economist. “The good news is that there’s a positive side to rising mortgage rates, too: They will slow price growth and curb competition for homes, providing a reprieve for some prospective buyers.”
Home buyers who purchased a home prior to the pandemic or at the beginning of it are benefiting from rising home prices and are seeing large increases in home equity.