Home prices are on the rise everywhere, but it seems that buyers in Sun Belt cities such as Phoenix, Tampa, Fla.; and Atlanta are having it harder than most as more people from out of town look to move there. Because those cities are popular destinations for people looking to relocate, home prices are not surprisingly increasing very fast.
Although a lot of Sun Belt metros can still be considered affordable, the growing competition from new results and higher inflation is making life much more miserable for buyers. Recent data shows that with inflation at a 40-year high, the average home buyer is spending up to $500 a month more on living costs than they were just one year ago.
As such, a recent analysis from the National Association of Realtors shows that home buyers will have to search for a home that costs around $40,000 less than what they would have been willing to pay one year ago, to cancel out the increased cost of living.
For instance, 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 another 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.