Sun Belt metropolitan areas like Phoenix and Tampa, Florida, are seeing higher surges in housing costs compared with the West and Northeast, according to a new analysis from Bank of America Institute.
Nationwide, for Bank of America (BofA) customers, median mortgage payments were up 7% year over year and median rent payments were up 8% YoY for the six months through February. However, in the Sun Belt, metros like Phoenix saw rent cost increases up 26% YoY for the six months through February compared with 2.5% in San Francisco. Charlotte, North Carolina, and Austin, Texas, saw 21% rent growth.
While milder than rent growth, median mortgage data shows a similar pattern with Sun Belt markets seeing the largest rise in mortgage payments. Data reveals that Tampa saw 15% mortgage payment growth; Austin, 14% growth; Orlando, Florida, and Atlanta, 13% growth; Dallas, 12% growth; and Phoenix and Charlotte, 10% growth.
“People across the Unites States continue to feel the squeeze from higher housing costs, but the impact is uneven between regions,” says Anna Zhou, economist for Bank of America Institute. “Ultimately, population and employment growth are two main factors driving a region’s housing market, and this may be why we are seeing an over 20% YoY increase in rents in many Sun Belt cities.”
In addition to domestic migration trends to the Sun Belt, Institute economists suggest that job creation, which has exceeded the national average since the pandemic’s start, and the heightened creation of higher-paid jobs has possibly placed upward pressure on the local housing markets. “For example, in January 2023, total employment in Tampa and Phoenix was around 7% higher than in January 2020, compared with just 1% growth for the national payroll,” the analysis said.
The markets continue to offer more affordable housing even after the surge in prices and rents, BofA says. Affordability has been the primary driver behind domestic migration to the Sun Belt over the last few years.