Migration from blue states spikes cost of living in certain cities

Popular destinations like Atlanta, Phoenix and Tampa have seen higher rates of inflation than the country overall.

Updated: February 2, 2022 - 12:16am

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The cost of living is skyrocketing in certain “migration destination” cities where those fleeing mostly blue states are landing, according to a newly released report.

Redfin released the analysis, which shows that cities like Atlanta, Phoenix and Tampa have seen higher rates of inflation than the country overall. According to the report, those increases are “double the inflation rates in San Francisco and New York, places people are moving away from.”

“Migration into those places is one reason for rapidly rising prices of consumer goods and services,” Redfin said. “Because of high inflation, including rising home prices, the financial advantage of living in what are now relatively affordable places is likely to diminish.”

Americans have moved in droves, particularly from states like Illinois, New York and California, to other states. Many of those migrants are settling in the same cities and drastically affecting the economies there.

“Atlanta, the 10th most popular migration destination in the fourth quarter, saw prices of goods and services increase by 8.9% year over year during the same period, the highest inflation rate of all the metros included in this analysis,” Redfin reports.

Another city, Phoenix, saw an 8.4% price increase in the fourth quarter of 2021, the second highest inflation increase and the second highest number of new arrivals from other states, according to the report.

“In Tampa – the fifth most popular destination – prices rose 8% year over year, the third highest inflation rate,” Redfin reports. “On the flip side, San Francisco, the number-one place Americans moved away from during the fourth quarter, had the lowest inflation rate (4%). New York, which had the second-lowest inflation rate (4.6%), ranked number three on the list of places people are leaving, and Los Angeles – number two on the list of places people are leaving – had the seventh-lowest inflation rate (6%).”

Inflation has become a major concern for Americans after a steady stream of data showing prices of consumer goods and services are rising at the highest level in decades. These factors have only added to Americans’ pessimism on inflation.

Gallup released a poll this month showing that 79% of surveyed Americans “predict inflation will go up." The poll also found that 50% of respondents expect inflation will go up "a lot." According to Gallup, those are the most pessimistic figures on inflation ever recorded by the pollster.

“In the past, Americans have always been more likely to say inflation will increase rather than decrease, but the current expectation is higher than usual – in fact, it is the highest Gallup has measured in its trend,” Gallup said. “The prior high was 76% in September 2005. In recent years, from 2007 through 2020, roughly six in 10 Americans have expected inflation to increase.”

Redfin compiled its report by looking at metro areas where inflation data is available along with migration data.

Home prices have been a major source of inflation in those cities, due in part to the large difference between home prices in the cities where migrants are leaving, compared to the substantially lower prices in the cities where migrants are settling.

“For instance, Atlanta home prices were up 22.8% year over year in December, compared with a 10.3% increase in San Francisco,” Redfin said.