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

1
Photo by Getty Images/Illustration by Orli Friedman/Bankrate
Bankrate Logo

Why you can trust Bankrate

While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .

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 third 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 Idaho rank second and fifth, 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 51st in the first-quarter ranking to 16th in the index based on summer 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 third quarter of 2021:

  1. Utah. Its home values jumped 30 percent in the 12-month period that ended Sept. 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. Arizona. Home values surged 28 percent, and few homeowners have fallen behind on their loans.
  3. Washington. Home values are up 21 percent, job growth is surging and few borrowers are past due.
  4. Florida. The Sunshine State’s home values jumped 25 percent, job growth is strong and taxes are low.
  5. Nevada. Hit hard in the early days of the pandemic, Nevada has rebounded. Job growth is second-highest in the U.S.

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 third quarter was a whopping $1.65 million, according to the National Association of Realtors. The typical price in Salt Lake City was $500,800 — 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 5 on our index:

  • 47. Pennsylvania. This state posted poor showings across the board.
  • 48. Mississippi. Low ranks in price appreciation and past-due mortgages placed Mississippi near the bottom of the pack.
  • 49. Maryland. The state posted comparatively tepid appreciation of 12 percent, along with weak job growth.
  • 50. Washington, D.C. The district ranked in the middle of the pack in several measures but was weighed down by weak job growth.
  • 51. Louisiana. It ranks worst in past-due loans, with nearly 10 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 third quarter of 2021, Bankrate analyzed six data points:

  • annual home price appreciation for the third quarter as reported by the Federal Housing Finance Agency’s Home Price Index;
  • share of mortgages past due for the third quarter as reported by the Mortgage Bankers Association;
  • unemployment rate for September from the U.S. Labor Department;
  • annual job growth as of September 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 the third quarter of 2021
State Overall rank Appreciation rank Past due loans rank Job growth rank Unemployment rank Cost of living rank Tax rank
Alabama 26 23 49 18 8 8 41
Alaska 34 46 23 16 42 47 3
Arizona 2 3 7 9 37 26 24
Arkansas 30 25 41 31 17 3 45
California 12 11 6 7 50 49 49
Colorado 8 14 9 12 35 35 21
Connecticut 35 22 39 28 45 44 47
Delaware 44 38 34 48 33 34 13
District of Columbia 50 51 30 39 43 51 46
Florida 4 5 32 8 29 25 4
Georgia 18 17 43 10 9 10 31
Hawaii 16 20 13 1 44 50 38
Idaho 11 1 40 24 2 19 20
Illinois 45 45 37 26 45 21 36
Indiana 31 29 35 43 17 12 9
Iowa 39 47 14 35 17 16 40
Kansas 42 41 33 36 15 17 35
Kentucky 28 31 29 40 22 7 19
Louisiana 51 49 51 50 38 15 42
Maine 19 6 20 41 28 39 29
Maryland 49 48 46 11 40 45 44
Massachusetts 21 24 16 5 31 48 34
Michigan 22 28 18 33 25 4 14
Minnesota 27 43 8 13 12 29 46
Mississippi 48 44 50 37 38 1 32
Missouri 25 33 27 29 13 2 12
Montana 9 4 5 49 10 31 5
Nebraska 24 32 15 25 1 24 28
Nevada 5 7 26 2 50 37 7
New Hampshire 14 12 12 32 2 41 6
New Jersey 36 27 42 15 48 43 50
New Mexico 29 35 28 22 47 23 23
New York 46 30 47 34 48 36 48
North Carolina 7 10 24 21 21 13 10
North Dakota 43 50 11 45 11 33 17
Ohio 41 37 31 47 34 6 39
Oklahoma 33 26 48 30 7 9 30
Oregon 10 16 3 17 27 40 15
Pennsylvania 47 42 38 38 41 27 27
Rhode Island 20 15 22 14 31 46 37
South Carolina 23 21 36 19 20 18 33
South Dakota 13 18 1 42 2 20 2
Tennessee 6 9 21 20 23 5 18
Texas 15 19 44 3 35 14 11
Utah 1 2 4 6 2 30 8
Vermont 17 8 17 27 2 42 43
Virginia 37 36 19 44 13 28 26
Washington 3 13 2 4 29 38 16
West Virginia 38 40 45 23 25 11 22
Wisconsin 32 34 10 46 16 22 25
Wyoming 40 39 25 51 24 32 1

Learn more:

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
Urgent! Rates expected to jump on Fed Day
-- Days  :  
-- Hours  :
  -- Minutes  :
  -- Seconds
Close icon
Compare refinance rates