Before the coronavirus recession, the Utah 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 intensified.
Dave Robison, former president of the Utah Association of Realtors, simply summarizes the activity. “This is insane,” says Robison, a real estate broker in Salt Lake City.
Its evaluation is not limited to the sale. Home prices in Utah have skyrocketed as Californians flock to the state. Utah has the fastest pace of job growth in the country, with lowest unemployment, extremely low mortgage rates, few defaults, and low local and state taxes.
All of these factors pushed Utah to the top spot in Bankrate’s 2020 Housing Heat Index, a spot it continues to hold for the first quarter of 2021. Residential real estate has exploded during the recession of coronavirus, and Utah has become a particularly desirable market.
Other states in the region are also booming. South Dakota, Montana and Idaho rank second, third and fifth, respectively, in the Bankrate Index.
At the opposite end of the list is Hawaii, a state that has been hit hard by the COVID-19 pandemic. Its tourism industry is slowly recovering from a virtual standstill, and the employment picture in Hawaii remains bleak.
The 5 States with the Hottest Housing Economies
The Housing Heat Index shows how state property markets are behaving in the coronavirus-fueled housing boom and how they may behave in the future.
These five states had the strongest housing economies in the first quarter of 2021:
Its home values jumped 19% in the 12-month period ending March 31, second best among U.S. states, according to the Federal Housing Finance Agency. Utah posted the second highest job growth in the country from March 2020 to March 2021, according to Bankrate analysis of Department of Labor data. Additionally, Utah had the lowest unemployment rate in the country and its tax burden is among the lowest in the country, according to the Tax Foundation.
2. South Dakota
Home prices have climbed nearly 15% and South Dakota is tied with Utah for the lowest unemployment rate in the country.
Home prices have risen 15% in the past year and Montana has the lowest level of delinquent mortgage payments in the country, according to the Mortgage Bankers Association.
4. New Hampshire
The geographic oddity in our ranking, New Hampshire has seen home values soar 16%, and the unemployment rate and tax burden are low.
Idaho home prices were the highest in the country, climbing 23.7% in the year ending March 31. And job growth is the strongest in the country. However, Idaho’s overall rankings were tempered by mid-range readings for cost of living and taxes, and by a ranking behind the pack in mortgage delinquencies.
Buyers are looking for affordable, space
High rankings of states in the mountain time zone illustrate a shift in the housing market: Americans are still drawn to healthy job markets, but even before the coronavirus pandemic they were increasingly unwilling to pay to live in places like San Jose, Seattle, and Boston.
COVID-19 has pushed many – especially those who can work remotely – to move from more expensive areas to more affordable ones.
“We are seeing the ingredients of a renewed affordability migration,” says Mark Vitner, senior economist at Wells Fargo. “The beneficiaries of this change have largely been the mid-sized subways in the mountainous western states.”
The median price of a single-family home sold in Silicon Valley in the first quarter was $ 1.5 million, according to the National Association of Realtors. The typical price in Salt Lake City was $ 435,400 – above the national median, but not dramatically, and just a fraction of the price paid by residents of Northern California.
The price differential prompted many players in high-cost markets to consider relocating. The concept is particularly appealing to workers who can move their high-paying jobs to areas with lower cost of living.
“People suddenly have the choice of where to live because they’re not tied to a desk,” says Alicia Holdaway, agent at Summit Sotheby’s International Realty in Draper, Utah, and former chair of the Salt Lake City Board of Realtors . “We have a net in migration that has been happening for years and is only increasing.”
Every boom has its drawbacks, of course. In some cases, newcomers to the Utah housing market are full of cash and willing to push up the prices.
“There is always a flip side,” Holdaway says. “We have seen housing affordability become a crisis.”
The 5 States with the Coolest Housing Savings
As the nationwide housing boom rages on, every state has seen property values rise in the 12 months that ended in March. However, some state economies are struggling with weak job growth and other challenges. The last 5 of our index:
High unemployment and lukewarm price appreciation put Illinois at the bottom of the pack.
48. New York
Hit hard by the pandemic, New York is facing a number of headwinds. It ranks almost last in job growth, unemployment, tax burden and delinquent loans.
49. Washington, DC
The neighborhood ranks near the bottom of home price appreciation. The city also ranked last in cost of living and near the bottom of the unemployment rate in terms of tax burden.
It ranks as the worst for delinquent loans, with over 9% of homeowners behind on their mortgage payments. Louisiana is also doing poorly when it comes to price appreciation, job growth and the tax burden.
This tourism dependent state ranks last for job growth and unemployment and almost last for price appreciation. “The big picture is a very weak economy,” says Carl Bonham, executive director of the University of Hawaii’s Economic Research Organization.
To calculate the Home Heat Index for the first quarter of 2021, Bankrate analyzed six data points:
n Annual appreciation of house prices for the first quarter, as reported by the house price index of the Federal Housing Finance Agency;
n Share of mortgages past due for the first quarter, according to the Mortgage Bankers Association;
n Unemployment rate for the month of March from the US Department of Labor;
n Annual employment growth from March from US Department of Labor;
n The cost of living index for 2020 from the Center for Regional Economic Competitiveness;
n State-by-State tax burdens for the 2020-2021 fiscal year as reported by the Fondation pour la Fiscalité.