BofA Data Finds the Surge in Housing Costs Varies by Metropolitan Area, with the Sun Belt Significantly Outpacing the West and Northeast

Rhea-AI Summary

Bank of America Institute's recent analysis reveals a significant increase in housing costs in the U.S., with median rent payments rising by 8% and mortgage payments by 7% year-over-year as of February 2023. Particularly in the Sun Belt cities like Phoenix and Tampa, rent increased by 26% and 23%, respectively, well above the national average. This surge contrasts with slower growth in cities outside this region, such as San Francisco, which saw only 2.5% rent growth. Factors driving these trends include domestic migration, affordability, job creation, and higher-paid positions in technology and finance, which have intensified housing demand in the Sun Belt.

Positive

• Median rent growth in Phoenix at 26% and Tampa at 23% indicates strong demand and market resilience in Sun Belt cities.
• Job creation and higher salaries in the Sun Belt could lead to sustained economic growth and further housing demand.

Negative

• Overall, housing cost increases may lead to affordability issues for some consumers, impacting overall economic health.

Median Rent Payment Growth in Sun Belt Cities, such as Phoenix and Tampa, Outpaced Western and Northeastern Cities by more than 20 percentage points

NEW YORK, March 27, 2023 /PRNewswire/ -- Bank of America Institute released new analysis today which examines the increase in housing costs across the United States. BofA internal data shows that median rent payments were up 8% year-over-year (YoY) and median mortgage payments were up 7% YoY for BofA customers in February, but there are meaningful variations by geography. Metropolitan areas in the Sun Belt like Phoenix and Tampa saw rent costs increase by as much as a staggering 26% and 23% YoY respectively, both of which are at a record high pace despite the Fed action aimed at taming price increases. Cities outside of the Sun Belt, like San Francisco, saw more muted growth, as low as 2.5% YoY. Mortgage payments saw a similar regional divide, with metropolitan areas like Tampa, Orlando and Atlanta seeing the biggest rise, while Chicago, Washington, D.C. and Boston see only modest gains.

	Median rent payment growth	Median mortgage payment growth
Phoenix	26 %	10 %
Tampa	23 %	15 %
Orlando	23 %	13 %
Charlotte	21 %	10 %
Austin	21 %	14 %
Atlanta	20 %	13 %
Dallas	18 %	12 %
Miami	16 %	15 %
New York	9 %	9 %
Boston	8 %	8 %
Seattle	7 %	12 %
Chicago	7 %	7 %
Los Angeles	6 %	9 %
San Francisco	2.5 %	10 %
Source: Bank of America Internal Data. Data represents %YoY six-month moving average as of Feb. 2023

Economists at the Institute offer four possible reasons for the regional divide:

1. Domestic migration trends between states since the beginning of the pandemic saw people moving to Arizona, Florida and Texas, while leaving California and Illinois
2. Sun Belt markets offer more affordable housing, even after the surge in home prices and rents
3. Job creation in the Sun Belt markets outpaced other markets and exceeded the national average since the start of the pandemic
4. 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."

Read the full analysis and methodology

About Bank of America Institute

Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, Environmental, Social and Governance (ESG), and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from 67 million consumer and small business clients, 56 million verified digital users, $4.2T in total payments in 2022 and $1.4T in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.  The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 3,900 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 56 million verified digital users.  Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services.  The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Reporters may contact:

Melissa Anchan, Bank of America     
Phone: 1.646.532.9241 
melissa.anchan@bofa.com

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SOURCE Bank of America Corporation

FAQ

What does the recent Bank of America report say about rent increases in Phoenix?

The report indicates that rent in Phoenix increased by 26% year-over-year.

How much did Tampa's rent increase according to Bank of America data?

Tampa's rent grew by 23% year-over-year, reflecting significant demand.

What are the trends in mortgage payments according to the Bank of America analysis?

Mortgage payments rose by 7% year-over-year for Bank of America customers, with notable increases in Sun Belt areas.

What factors are driving the rent increases in Sun Belt cities?

Factors include domestic migration, affordable housing, job creation, and the rise of higher-paid positions in technology and finance.

When was the Bank of America housing analysis released?

The analysis was released on March 27, 2023.