Skyhigh rent means some people are ditching skyscrapers for green(er) pastures, finds Bank of America. Discovering that the cost of living to be unaffordable in many cities, many Americans are either forced to move out or downgrade to cheaper apartments.
Looking at deposits data from a fixed sample size of around 45 million customers, Bank of America found that the median rent payments of Americans went up by 3.7% in the past year. That’s a full point lower than the reported rate of rent inflation. So what does that mean? Basically—Americans are scrambling to find a deal, as the report attributes this gap to people “downgrading within the same city.”
“Consumers would rather pack their bags than pay a higher rent, and that can play out in two ways,” Joe Wadford, Bank of America Institute economist and contributor to said report, explained 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,” he added.
During the pandemic, swaths of city-dwellers left coastal homes, further enabled by work-from-home options. Many of those that moved (or were looking to move) were Gen Zers and Millennials, according to a Fortune and SurveyMonkey survey from 2021. Many renters “skew towards younger and lower income consumers,” per the Bank of America report.
Years later, the trend continues to some degree. But this time it’s a pricing issue. People within the West and Northeast are moving in search for more affordable options in the South and Midwest—notes the report. There’s a better deal there, after all. Those moving to the South experience only a 2% increase in new rents, which is “significantly lower than the rate of inflation.”
And those that can afford to are staying put in their cities but moving house. The trend of moving to cheaper apartments is most common amongst those making more than $125,000. It’s even more of a phenomenon in the Northeast, as those with higher incomes that stayed within the same city paid 6% less for their new rent in the third quarter of this year. That’s all to say, wealthier city-dwellers are doing what they can do to downsize and stay put.
Even so, it’s not always enough.
Here are the top 8 cities that people moved out of over the last year
- San Jose
- Miami
- San Francisco
- Boston
- Los Angeles
- New York
- Orlando
- Washington
And, on the other hand, below are the 8 cities that most people moved to
- Indianapolis
- Columbus
- Denver
- Cleveland
- Austin
- Las Vegas
- San Antonio
- Phoenix