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

Houses in Mountain West
Photo by Getty Images/Illustration by Orli Friedman/Bankrate
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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 when it debuted in 2020. Utah continues to hold the top spot for the fourth 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. Arizona and Montana rank second and third, 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 was hit hard by the COVID-19 pandemic — climbed from the bottom of Bankrate’s ranking. It rose from dead last in the first-quarter ranking to 14th in the index based on autumn 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 fourth quarter of 2021:

  1. Utah. Its home values jumped 27.1 percent in the 12-month period that ended Dec. 31, second-best among U.S. states, according to the Federal Housing Finance Agency. Utah posted the second-strongest unemployment rate in the nation in December 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. Arizona. Home values surged 27.4 percent, best in the nation, and few homeowners have fallen behind on their loans.
  3. Montana. Home values climbed nearly 24 percent, and Montana posted top-five finishes in past-due mortgages, job growth and tax burden.
  4. Washington. Home values are up 20 percent, job growth is surging and few borrowers are past due.
  5. Florida. The Sunshine State’s home values jumped 26 percent, job growth is strong and taxes are low.

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 fourth quarter was a whopping $1.68 million, according to the National Association of Realtors. The typical price in Salt Lake City was $505,700 — 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 September. However, some state economies are struggling with weak job growth and other challenges. The bottom five on our index:

  • 47. Connecticut. This state posted poor showings across the board.
  • 48. New York. Low ranks in price appreciation and unemployment landed New York near the back of the pack.
  • 49. Maryland. The state posted comparatively tepid appreciation of 11 percent, along with a high level of past-due loans.
  • 50. Washington, D.C. The district ranked in the middle of the pack in several measures but was weighed down by high unemployment and a hefty tax burden.
  • 51. Louisiana. It ranks worst in past-due loans, with 8.5 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 fourth quarter of 2021, Bankrate analyzed six data points:

  • Annual home price appreciation for the fourth quarter as reported by the Federal Housing Finance Agency’s Home Price Index;
  • Share of mortgages past due for the fourth quarter as reported by the Mortgage Bankers Association;
  • Unemployment rate for December from the U.S. Labor Department;
  • Annual job growth as of December 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.

Learn more:

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