Housing Heat Index: Which state real estate markets are doing the best, worst during the pandemic boom?

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Before the coronavirus recession, Utah’s housing market was on fire. Then came the COVID-19 pandemic, which sent residents of Northern California and Seattle in search of affordable homes and more space, and an already-hot market grew hotter.

Dave Robison, past president of the Utah Association of Realtors, sums up the activity simply. “It’s insane,” says Robison, a real estate broker in Salt Lake City.

His assessment isn’t just salesmanship. Utah home prices have been soaring as Californians stream into the state. Utah boasts the nation’s strongest pace of job growth, along with rock-bottom unemployment, ultra-low mortgage rates, few mortgage delinquencies and low state and local taxes.

All those factors pushed Utah into first place in Bankrate’s Housing Heat Index in 2020, a spot it continues to hold for the second quarter of 2021. Residential real estate has boomed during the coronavirus recession, and Utah has emerged as a particularly desirable market.

Other states in the Mountain time zone also are thriving. Montana, Arizona and Idaho rank fourth, fifth and sixth, respectively, in Bankrate’s index.

At the opposite end of the list is Louisiana, where price appreciation is among the slowest in the nation and mortgage delinquencies are among the highest. Hawaii — a state that has been hit hard by the COVID-19 pandemic — climbed from the bottom of Bankrate’s ranking. It rose from 51st in the first-quarter ranking to 36th in the index based on spring economic data.

The 5 states with the hottest housing economies

The Housing Heat Index shows how states’ real estate markets are faring in the coronavirus-fueled housing boom, and how they might perform in the future. To calculate the ranking, Bankrate analyzed six data points: annual home price appreciation, share of mortgages past due, unemployment, annual job growth, statewide cost of living index and state-by-state tax burdens.

These five states had the strongest housing economies in the second quarter of 2021:

  1. Utah. Its home values jumped 28 percent in the 12-month period that ended June 30, second-best among U.S. states, according to the Federal Housing Finance Agency. Utah posted the second-strongest unemployment rate in the nation in June 2021, according to a Bankrate analysis of Labor Department data. What’s more, Utah’s tax burden is among the lowest in the nation, according to the Tax Foundation.
  2. New Hampshire. The geographic oddity in our ranking, New Hampshire saw home values jump 22 percent, and the unemployment rate and tax burden are low.
  3. Washington. The state experienced 22 percent home price appreciation, and just a tiny fraction of homeowners are behind on their mortgages.
  4. Montana. Home prices rose 24 percent in the past year, and Montana has the nation’s lowest level of past-due mortgage payments, according to the Mortgage Bankers Association.
  5. Arizona. Home values surged 24 percent, and few homeowners have fallen behind on their loans.

Homebuyers seek affordability, space

The prominent rankings of states in the Mountain time zone illustrate a shift in the housing market: Americans are still drawn to healthy labor markets, but even before the coronavirus pandemic, they were growing less willing to pay up to live in places like San Jose, Seattle and Boston.

COVID-19 has pushed many — especially those who can work remotely — to leave the priciest areas for more affordable regions.

“We are seeing the makings of a renewed affordability migration,” says Mark Vitner, senior economist at Wells Fargo. “The beneficiaries of that shift have largely been the midsized metros in the mountain states of the West.”

The median price of a single-family home sold in Silicon Valley during the second quarter rose to a whopping $1.7 million, according to the National Association of Realtors. The typical price in Salt Lake City was $485,100 — above the national median, but not dramatically so, and just a fraction of the price paid by residents of Northern California.

The price gap has spurred many in high-cost markets to consider moving. The notion is especially appealing to workers who can take their high-wage jobs to areas with lower costs of living.

“People suddenly have the ability to choose where they live, because they’re not tethered to an office,” says Alicia Holdaway, an agent at Summit Sotheby’s International Realty in Draper, Utah, and past president of the Salt Lake City Board of Realtors. “We’ve had a net in-migration that’s been happening for years, and that’s only increased.”

Every boom brings its disadvantages, of course. In some cases, new arrivals to Utah’s housing market are flush with cash and willing to bid up prices.

“There’s always a flip side,” Holdaway says. “We’ve been seeing housing affordability become a crisis.”

The 5 states with the coolest housing economies

As a nationwide housing boom rages, every state saw property values increase during the 12 months that ended in June. However, some state economies are struggling with weak job growth and other challenges. The bottom 5 on our index:

  • 47. Washington, D.C. The district ranked in the middle of the pack in several measures but was weighed down by weak job growth.
  • 48. Mississippi. Low ranks in price appreciation and past-due mortgages placed Mississippi near the bottom of the pack.
  • 49. West Virginia. The state posted comparatively tepid appreciation of 12 percent, along with weak job growth.
  • 50. Oklahoma. The state ranked near the bottom in home price appreciation and job growth.
  • 51. Louisiana. It ranks worst in past-due loans, with nearly 9 percent of homeowners behind on their mortgage payments. Louisiana also fares poorly on price appreciation, job growth and tax burden.

Methodology

To calculate the Housing Heat Index for the second quarter of 2021, Bankrate analyzed six data points:

  • annual home price appreciation for the second quarter as reported by the Federal Housing Finance Agency’s Home Price Index;
  • share of mortgages past due for the second quarter as reported by the Mortgage Bankers Association;
  • unemployment rate for June from the U.S. Labor Department;
  • annual job growth as of June from the U.S. Labor Department;
  • the cost of living index for 2021 from the Center for Regional Economic Competitiveness;
  • state-by-state tax burdens for the 2020-21 fiscal year as reported by the Tax Foundation.

The index overweights home price appreciation, the metric that most clearly conveys a housing market’s desirability. And the index underweights cost of living and tax burden — home prices can soar despite those factors, but a new wave of remote work makes those factors more relevant than they were in the past.

Housing Heat Index for second quarter of 2021
State Overall rank Appreciation rank Past due loans rank Job growth rank Unemployment rank Cost of living rank Tax rank
Alabama 41 35 43 34 7 8 41
Alaska 38 51 20 15 39 47 3
Arizona 5 3 6 31 40 26 24
Arkansas 46 40 37 43 19 3 45
California 19 11 11 27 46 49 49
Colorado 11 12 12 18 35 35 21
Connecticut 22 13 41 12 47 44 47
Delaware 34 34 33 25 33 34 13
District of Columbia 47 32 32 47 43 51 46
Florida 21 17 38 39 26 25 4
Georgia 27 22 45 27 12 10 31
Hawaii 36 42 16 7 47 50 38
Idaho 6 1 40 12 5 19 20
Illinois 43 44 39 21 44 21 36
Indiana 23 30 34 27 16 12 9
Iowa 39 47 7 39 12 16 40
Kansas 35 27 30 43 8 17 35
Kentucky 31 33 28 36 19 7 19
Louisiana 51 49 51 43 41 15 42
Maine 9 7 25 4 23 39 29
Maryland 44 39 49 10 35 45 44
Massachusetts 16 18 18 3 24 48 34
Michigan 10 20 17 11 26 4 14
Minnesota 30 38 10 19 12 29 46
Mississippi 48 48 50 34 35 1 32
Missouri 18 23 23 33 17 2 12
Montana 4 4 1 42 8 31 5
Nebraska 33 36 14 38 1 24 28
Nevada 12 14 31 1 50 37 7
New Hampshire 2 9 13 9 3 41 6
New Jersey 24 16 48 2 44 43 50
New Mexico 45 41 27 48 51 23 23
New York 32 25 47 5 47 36 48
North Carolina 15 19 24 19 22 13 10
North Dakota 42 50 8 39 12 33 17
Ohio 37 28 29 46 28 6 39
Oklahoma 50 45 44 51 8 9 30
Oregon 7 10 4 22 32 40 15
Pennsylvania 26 26 36 16 41 27 27
Rhode Island 13 5 26 7 34 46 37
South Carolina 29 21 35 36 21 18 33
South Dakota 17 37 2 23 3 20 2
Tennessee 14 15 21 27 24 5 18
Texas 25 24 46 24 38 14 11
Utah 1 2 5 14 2 30 8
Vermont 8 6 19 5 6 42 43
Virginia 28 29 22 31 17 28 26
Washington 3 8 3 16 28 38 16
West Virginia 49 46 42 49 30 11 22
Wisconsin 20 31 9 25 11 22 25
Wyoming 40 43 15 50 31 32 1

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
Edited by
Senior mortgage editor
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