In a new analysis released by the Bank of America Institute (BOA) examines the increase in housing costs across the country. Based on internal research, the median rent payment increased 8% year over-year in February 2023 while mortgages increased at a rate of 7% year-over-year
Breaking this data down by region and city revealed variations of this data by geography.
On the top end, Sun Belt Cities Tampa and Phoenix saw the largest rent increases of 26% and 23%, respectively. This growth happened despite work by the Federal Reserve to tame housing price increases.
On the low end of the spectrum for example, San Francisco saw a low growth rate of 2.5% year-over-year.
Economists at the Institute offer four possible reasons for the regional divide:
- Domestic migration trends between states since the beginning of the pandemic saw people moving to Arizona, Florida and Texas, while leaving California and Illinois
- Sun Belt markets offer more affordable housing, even after the surge in home prices and rents
- Job creation in the Sun Belt markets outpaced other markets and exceeded the national average since the start of the pandemic
- The creation of higher-paid jobs such as those in technology and finance, which saw higher growth in the Sun Belt, puts upward pressure on the local housing market
“People across the Unites States continue to feel the squeeze from higher housing costs but the impact is uneven between regions,” said 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.”
This survey was based on proprietary data covering 67 million accounts, coming to $4.2 trillion in payments in 2022 and $1.4 trillion consumer wealth management deposits.
Click here to see BOA’s research in its entirety.