{"id":4538,"date":"2022-08-20T13:54:49","date_gmt":"2022-08-20T17:54:49","guid":{"rendered":"https:\/\/propertyonion.com\/education\/?p=4538"},"modified":"2022-08-31T10:07:48","modified_gmt":"2022-08-31T14:07:48","slug":"the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022","status":"publish","type":"post","link":"https:\/\/propertyonion.com\/education\/the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022\/","title":{"rendered":"The Strange Reason Hot Real Estate Markets Have the Highest Inflation in 2022"},"content":{"rendered":"\n<p>We all know that inflation is running rampant at the moment, with the annual inflation rate accelerating to 9.1% in June of 2022. This is the highest since November of 1981 and above market forecasts of 8.8%. Yes, energy prices rose 41.6% \u2014 the highest since April 1980 \u2014 which was boosted by a gasoline price of 59.9%!<\/p>\n\n\n\n<p>These are eye-watering statistics for us ordinary folk. Food costs surged to 10.4%, the highest since February 1981. Even my dusty old crystal ball couldn\u2019t have predicted these surges.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">In this Article:<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/propertyonion.com\/education\/the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022\/#Inflation_Is_High_in_Popular_Locations\" >Inflation Is High in Popular Locations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/propertyonion.com\/education\/the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022\/#Relocating_Homebuyers_Are_at_an_All-Time_High\" >Relocating Homebuyers Are at an All-Time High<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/propertyonion.com\/education\/the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022\/#What_Can_We_Expect_in_the_Future\" >What Can We Expect in the Future?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/propertyonion.com\/education\/the-strange-reason-hot-real-estate-markets-have-the-highest-inflation-in-2022\/#Use_Inflation_to_Your_Advantage\" >Use Inflation to Your Advantage<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inflation_Is_High_in_Popular_Locations\"><\/span>Inflation Is High in Popular Locations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The most popular destinations for people relocating have the highest inflation rates in the U.S., partly because they are attracting so many new residents. Due to supply and demand, they are experiencing sharp <a href=\"https:\/\/propertyonion.com\/education\/what-is-the-effect-of-inflation-on-housing-prices\/\" target=\"_blank\">home price increases<\/a>.<\/p>\n\n\n\n<p>What do these figures mean to investors? <strong>There are four U.S. metros that are experiencing double-digit inflation in the second quarter of 2022: Phoenix, Atlanta, Tampa, and Miami. <\/strong>All four metro cities were among the most popular migration destinations for Americans, according to a new Redfin.com report. As always, Florida has two of the four cities that top the list of most sought-after places to relocate to.<\/p>\n\n\n\n<p>In the study, Phoenix saw prices of goods and services rise by 11.3% year over year in the second quarter, followed by Atlanta with the second highest inflation rate of 10.9%. Tampa clocked in at 10.6% and was the number two city for migration. Miami was the most popular migration destination with the fourth highest inflation rate of 10%.<\/p>\n\n\n\n<p>The cities that homebuyers are leaving tend to have lower inflation rates. San Francisco tops the list of migrators, but prices there rose at a more modest 5.6%, the lowest inflation rate of the metros. New York had the second lowest inflation rate at 5.9% and is number three on the list of people leaving. This is followed by Los Angeles at 8%, Washington D.C. at 7.1%, and Seattle at 8.9%. These are the top five metros that people are deserting in droves to come to other major hotspot cities.<\/p>\n\n\n\n<p>\u201c<strong>A place\u2019s popularity has a big impact on how much its local prices go up<\/strong>,\u201d said Redfin Deputy Chief Economist&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.redfin.com\/news\/author\/taylormarr\/page\/3\/\" target=\"_blank\">Taylor Marr<\/a>. \u201cAn influx of people moving into a place like&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.redfin.com\/city\/14240\/AZ\/Phoenix\" target=\"_blank\">Phoenix<\/a>&nbsp;or&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.redfin.com\/city\/18142\/FL\/Tampa\" target=\"_blank\">Tampa<\/a>&nbsp;pushes up demand for everything from housing to food to fuel, which pushes up prices in all those areas and ultimately contributes to overall inflation.<\/p>\n\n\n\n<p>&#8220;That means it\u2019s getting more difficult for locals to afford daily expenses, especially when you consider that wages aren\u2019t rising as quickly. In&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.redfin.com\/city\/14240\/AZ\/Phoenix\" target=\"_blank\">Phoenix<\/a>, for instance, wages are up about 6% from a year ago but inflation is up more than 11%. Asking rents are up&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.redfin.com\/news\/redfin-rental-report-may-2022\/\" target=\"_blank\">24%<\/a>. Homeowners are in a better position than renters because they benefit from rising home values.\u201d&nbsp;<\/p>\n\n\n\n<p>Inflation may ultimately have a harsher effect on long-term residents of hot real estate metros. Investors may not only be priced out of the housing market once you factor in wages that can\u2019t keep up but are also forced to pay for daily expense items. There\u2019s also the looming crisis of higher mortgage interest rates, which has an obvious effect on the real estate market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relocating_Homebuyers_Are_at_an_All-Time_High\"><\/span>Relocating Homebuyers Are at an All-Time High<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"768\" src=\"https:\/\/propertyonion.com\/education\/wp-content\/uploads\/2022\/08\/word-image.png\" alt=\"\" class=\"wp-image-4539\" srcset=\"https:\/\/propertyonion.com\/education\/wp-content\/uploads\/2022\/08\/word-image.png 1024w, https:\/\/propertyonion.com\/education\/wp-content\/uploads\/2022\/08\/word-image-300x225.png 300w, https:\/\/propertyonion.com\/education\/wp-content\/uploads\/2022\/08\/word-image-768x576.png 768w, https:\/\/propertyonion.com\/education\/wp-content\/uploads\/2022\/08\/word-image-501x375.png 501w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>The number of <a href=\"https:\/\/propertyonion.com\/education\/the-florida-housing-market-is-now-the-most-expensive\/\" target=\"_blank\">relocating homebuyers<\/a> is at a record high due to many more people working remotely, especially since the pandemic began. They have moved from expensive coastal job centers to comparatively affordable Sun Belt metros, even though their popularity made several of these areas less affordable than before. <\/p>\n\n\n\n<p>For example, Phoenix home prices have risen more than 60% through the pandemic, reaching a median price of $486,000 in May 2022.<\/p>\n\n\n\n<p>According to the U.S. News report for 2022 of the 25 Fastest Growing Places in the U.S., Florida takes an almighty 11 of these 25 spots. Florida cities took the following places:<\/p>\n\n\n\n<p>#2: Lakeland<br>#3: Sarasota<br>#4: Fort Myers<br>#6: Ocala<br>#7: Port St. Lucie<br>#8: Daytona Beach<br>#9: Naples<br>#12: Melbourne<br>#14: Jacksonville<br>#15: Tampa<br>#25: Orlando<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Can_We_Expect_in_the_Future\"><\/span>What Can We Expect in the Future?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As investors, we must constantly be aware of all trends that affect real estate market prices as we decide what our strategies will be moving forward.<\/p>\n\n\n\n<p>According to the latest July 2022 news release from Fannie Mae, expectations for 2022 and 2023 were downgraded in July due to the softening of consumer spending and a downward revision to business inventory investment data. <strong>The Economic and Strategic Research Group (ESR) now expects a recession to begin in the first half of 2023<\/strong> due to the aggressive monetary policy response required of the Federal Reserve to bring down inflation from its current decade-high levels.<\/p>\n\n\n\n<p>The ESR Group revised its forecast for total home sales growth in 2022 to a decline of 15.6% but revised upwards its home price appreciation forecast to 16% year-over-year growth in 2022. It continues to anticipate a strong deceleration in home price growth moving forward due to the delayed effects of <a href=\"https:\/\/propertyonion.com\/education\/mortgage-rate-predictions-for-2023\/\" target=\"_blank\">higher mortgage rates<\/a> and the slowing economy weighing on purchase demand.<\/p>\n\n\n\n<p><a id=\"post-4538-_Hlk106089798\"><\/a> \u201cThe economy slowed significantly, though unevenly, in the first half of 2022 on the expectation that the Fed will aggressively raise interest rates,\u201d said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. <\/p>\n\n\n\n<p>\u201cWith inflation running well above the target rate, the market\u2019s expectation that further, substantial monetary tightening is needed has driven interest rates even higher, and interest rate-sensitive sectors, including housing, are slowing in response. Homes listed for sale are increasingly seeing asking-price reductions, and both construction and home sales \u2014 both existing and new \u2014 are slowing.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Use_Inflation_to_Your_Advantage\"><\/span>Use Inflation to Your Advantage<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As investors, our strategies may have to change from a straight flip to sell to creating more \u201cdoors\u201d for potential renters. Especially in college towns and migration hotspots that people are flocking to, this could be the perfect opportunity to capitalize on a changing real estate landscape. <\/p>\n\n\n\n<p>You don\u2019t need your crystal ball to decide which Florida markets are the best to research and invest in \u2014 just use the facts. Happy hunting!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We all know that inflation is running rampant at the moment, with the annual inflation rate accelerating to 9.1% in June of 2022. This is the highest since November of 1981 and above market forecasts&hellip;<\/p>\n","protected":false},"author":2,"featured_media":4676,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[348,340,385,415,376,364,392],"class_list":["post-4538","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-articles","tag-348","tag-2022-real-estate","tag-385","tag-florida-market","tag-housing-market","tag-inflation","tag-market-predictions"],"_links":{"self":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/4538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/comments?post=4538"}],"version-history":[{"count":13,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/4538\/revisions"}],"predecessor-version":[{"id":4697,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/posts\/4538\/revisions\/4697"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/media\/4676"}],"wp:attachment":[{"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/media?parent=4538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/categories?post=4538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/propertyonion.com\/education\/wp-json\/wp\/v2\/tags?post=4538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}