Faced with escalating rent prices, Americans are increasingly seeking refuge in more affordable regions of the country.
A new report from Bank of America, based on deposit data from approximately 45 million customers, reveals a significant shift in migration patterns as renters grapple with the ongoing housing affordability crisis.
Downgrading and relocating: renters’ strategies for coping with inflation
The Bank of America report found that the median rent payment increased by 3.7% in the past year, a full percentage point lower than the reported rate of rent inflation.
This discrepancy suggests that renters are actively seeking ways to mitigate the impact of rising housing costs.
“Consumers would rather pack their bags than pay a higher rent,” explained Joe Wadford, Bank of America Institute economist, to CNBC’s Make It.
“The first is moving to a less expensive city, and then there’s a rising share of people who are saving money and playing it safe by downgrading within the same city.
From coasts to heartland: the allure of the South and Midwest
Echoing migration trends observed during the pandemic, renters are moving from expensive coastal cities in the West and Northeast to more affordable options in the South and Midwest.
Renters relocating to the South experienced only a 2% increase in new rents, significantly below the rate of inflation.
This cost advantage makes these regions particularly attractive for budget-conscious individuals.
Even high earners downsize: a trend among six-figure incomes
The trend of downgrading to cheaper apartments is prevalent even among high-income earners, particularly those making over $125,000 annually.
This phenomenon is especially pronounced in the Northeast, where higher-income renters who remained in the same city paid 6% less for their new rent in the third quarter of this year.
This data suggests that even affluent renters are actively seeking ways to reduce their housing expenses.
The exodus and the influx: mapping the migration
The Bank of America report identified the top eight cities experiencing an outflow of renters:
- San Jose
- Miami
- San Francisco
- Boston
- Los Angeles
- New York
- Orlando
- Washington
Conversely, the following eight cities witnessed the largest influx of new renters:
- Indianapolis
- Columbus
- Denver
- Cleveland
- Austin
- Las Vegas
- San Antonio
- Phoenix
This migration underscores the ongoing challenges of housing affordability in many major US cities and the growing appeal of more affordable alternatives, particularly in the South and Midwest.
As rent inflation continues to impact household budgets, the trend of renters seeking cheaper housing options is likely to persist.
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