As inflation continues to soar, here's how Arizona cities rank for affordability – The Business Journals

Cities in the Grand Canyon State are less affordable than they were just a few years ago, but when compared to the nation at large, Arizona still remains a relative bargain. In fact, Tucson turns out to be the 24th most affordable locale in the U.S. and the Phoenix metro is among the top 100.
That’s according to a Business Journals analysis of the latest data from the Bureau of Economic Analysis’ Regional Price Parity Index. The index shows how costs compare in a metro compared to the national baseline of 100. That means a metro with an index of 90 would be 10% more affordable than the national average, for example. That index includes the cost of housing, services and goods as well, providing a more complete picture of affordability.
The data is from 2020, so it doesn’t include much of the significant inflation that has transpired during the Covid-19 recovery, but it does show which metros are most well-positioned to capitalize on their relative affordability and which metros could be hurt by a flight to affordability.
In the Phoenix metro ranked No. 77 in affordability, with a regional price parity index score of 102.558, a little above the national baseline. Tucson, by comparison, had a score of 93.882.
Broken down into categories, the Valley was nearly in line with the national average for the price of goods, with a price parity index of 100.83 and ranking No. 75 in that column. The Phoenix area’s highest ranking, however, was No. 67 for the cost of housing, even though that’s the category where it had the highest index score, 107.515.
When it came to utilities, the Phoenix metro was also the 75th most affordable, with a price parity index score of 102.884.
In Tucson, the housing category was that city’s strongest, with an index score of 85.795 making it the 33rd most affordable place in the country. For goods, Tucson scored 96.261 for a No. 55 ranking in that category, while for utilities, the city was No. 76 with a score of 102.964.
The affordability scores in the analysis go back to 2008, and they show that Phoenix has hovered around the national baseline every year since then, dipping as low as 98.86 in 2017, but rising as high as 106.162 in 2009.
Click on the gallery above to see the top 25 cities in the analysis.
McAllen, Texas, topped the list as the most affordable place among the nation’s 100 largest metro areas. Its overall regional price parity index score was 88.5. Winston-Salem, North Carolina (89) and Jackson, Mississippi (90.133) followed closely behind. 
Excluding size from the equation, smaller metros in the South set the pace for affordability at the national level. The Shoals — a metro area in northwest Alabama that includes the cities of Florence, Sheffield, Tuscumbia and Muscle Shoals — was the most affordable metro in the nation, followed by Pine Bluff, Arkansas and Jackson, Tennessee. 
Coastal cities dominated the list of least affordable large metros, with San Francisco (117.4) and New York City (115.5) leading the way. 
“More densely populated, job rich, and amenity-filled communities tend to be the most expensive,” said Anirban Basu, senior economist at trade association Associated Builders and Contractors, who stressed that major cities the world over are expensive, including Hong Kong, Singapore, London, Paris and Dubai.  “This is reflected in home prices and rents.”
With the way prices have surged in the wake of the pandemic, Basu said affordability is a huge asset right now. 
Basu is right that more Americans are seeking out affordability, at least when it comes to housing, fleeing from high-priced urban cores to areas further out — a so-called “donut” effect that saw population growth in the outer rings surrounding metro areas. An analysis of U.S. Census and Internal Revenue Service data by The Business Journals found that many were leaving the cities but staying in the surrounding metro areas, often moving to areas where housing remained cheaper while their incomes stretched further. 
The rapid rise of remote work has only fueled this trend, Basu said.
“The bolstered pervasiveness of remote work adds fuel to this fire, with people able to be tied to employers in major metropolitan areas, but to live elsewhere. This represents a form of arbitrage, with people potentially earning Washington, D.C. or New York money, but perhaps able to live in Cumberland, Hagerstown, or Crisfield, Maryland, for instance,” Basu said, noting that ramped-up investments in rural broadband will further increase the appeal of less densely populated communities. 
While experts agree these trends were in place long before the Covid-19 pandemic, they have accelerated over the last two years as workers shuffle locations in pursuit of a variety of benefits, including a better job, more affordable housing and better amenities. 
Jeff Gifford of Phoenix Business Journal contributed to this story.
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