It’s boiling again in the American South. This time, the reason is not race riots or a collapsing real estate market, but inflation. In the southern states, this is significantly above the average of the US countries. There are several reasons, including worse public transport infrastructure.
The cities of the so-called “southern belt”, i.e. from Florida to Arizona, experienced during the coronavirus pandemic the largest influx of new residents seeking a warmer climate for quarantine life. Now these cities are experiencing the worst inflation in the country. Coincidentally, these are the places that fourteen years ago started the biggest real estate crisis in the history of the United States.
Average August inflation in the US reached 8.3 percent. Prices for a number of items are at an all-time high. IN but the southern part of the United States is closer to ten percent. In July, inflation in the so-called Southern region, as defined by the US Bureau of Statistics (BLS), reached 9.4 percent. Conversely, in the Northeast region, which includes New York, Boston and Philadelphia, it was the lowest in the entire United States – 7.3 percent.
Migration kicked up inflation
The reasons for regional differences can be partially explained can be traced to the costs of gasoline and electricity, which have risen sharply since the beginning of the year. Because most cities in the American South depend on cars and air conditioning, these costs make up a larger portion of consumer spending in that region.
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And just like in 2008, housing plays a crucial role – this time through the rental housing market, which is a major contributor to overall inflation. The influx of new residents in recent years is partly to blame, pushing prices up faster than the national average.
In Phoenix, Arizona’s capital city, rents rose 21 percent year over year. In Miami, the price of rental housing rose by about 14 percent. For city dwellers across the country, rents increased by just 6.3 percent.
Based on consumer price data, personal finance website WalletHub compared the 23 largest metropolitan areas in the United States. All of the metropolitan areas in the top five—Phoenix, Atlanta, Tampa, Miami, Dallas—are located in the southern region of the United States.
In last place is Anchorage, Alaska, followed by the San Francisco area and New York. Even before the pandemic, these cities had a high cost of living, which could explain the lower price growth compared to the rest of the country.
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Real estate prices rose by tens of percent
Many of the cities with the highest inflation have been migration hotspots during the pandemic, with people fleeing the northeastern United States and parts of California for cheaper real estate elsewhere in the country, especially where it’s not too cold.
For example, Florida and Arizona recorded some of the largest population gains in 2021, adding about 221 and 93 thousand residents, respectively, thanks to domestic migration. Phoenix and Tampa, which top the inflation charts, welcomed the most newcomers.
“As people basically flocked to these areas in the south, it drove up the demand for housing and the supply wasn’t keeping up,” Corcoran Realtor Carlos Bravo told Newstream.
A large influx of new residents from the most expensive places in the United States, such as New York or parts of California, to cheaper places in the South has already pushed up prices so much that this cities are not as affordable as they were at the beginning of the covid pandemic.
Although the real estate market has cooled somewhat due to rising mortgage rates, all of WalletHub’s top-ranked areas have seen home prices rise 15 to 30 percent in the past year, according to data from online brokerage Redfin.
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All about inflation
Inflation scarecrow. What causes it? How to defend against her? How to invest, where to save savings, where there are decent interest rates, which bonds are worth it? How do the state, the government and the CNB fight inflation? Who and why increases the price and how much? How to cope with price increases? Is it the right time to get a mortgage, will interest rates rise or fall, and for what reason? Context, tips, hints, warnings.
High inflation troubles not only the Czechia, but also other European countries and the United States. See the overview in the world.