4 Signs an Affordable City Is Becoming More Expensive To Live In

Article first appeared: https://finance.yahoo.com/news/4-signs-affordable-city-becoming-170034988.html

Any list of U.S. cities where living costs have spiked in recent years is likely to include familiar names like Boston, Miami, New York, San Francisco and Seattle. But you’ll also see a rising number of once-affordable cities, such as Fresno, California, and Pittsburgh.

There’s no mystery as to why affordable cities become more expensive. It usually boils down to the normal rules of supply and demand. When cities attract more residents, it creates a snowball effect that impacts everything from housing to consumer goods.

This usually results in higher home prices and rents. But those aren’t the only things that can make a city more expensive, according to Anthony Grosso, a New York-based financial strategist and mortgage loan originator.

“Housing costs, rents and food prices are the big things we talk about, but there are some hidden things that increase the cost of living that people don’t realize,” Grosso told GOBankingRates. “And this isn’t something you can find in normal online data — it comes from asking the right questions.”

Here are four signs that an affordable city is becoming more expensive to live in.

Less Housing Availability

The surest sign that an affordable city is becoming more expensive is difficulty finding a home or apartment. As more people flock to a city, it leads to a tighter inventory of places to buy or rent — especially if builders don’t move quickly enough to add more homes. The result is heated competition for available homes, leading to higher prices.

Compounding the problem is that in a rising market, many homeowners might be reluctant to sell because they know their home will keep rising in value, according to a blog from Compass Mortgage. Meanwhile, the number of available homes can also be reduced by demographic shifts, such as senior populations choosing to age in place rather than downsize.

Jeff Lichtenstein, broker and CEO of Echo Fine Properties, pointed to West Palm Beach, Florida, as an example. The city’s current population is more than 126,000, he explained. That’s up from about 117,500 in 2020 and around 82,000 in 2000.

“There is nowhere to build anymore because there is no land left in the prime areas,” he said. “New construction only occurs by knocking down and building up. The extra 8,870 residents over the past four years are now competing for a fewer supply of existing home sites.”