Home prices are soaring across the country as Americans rush to buy homes, fueled in part by a new ability to work remotely as a result of the COVID-19 pandemic. But where are they expected to increase the most? Not on the Sun Belt, in general, according to a new index.
Top of the list was Coeur d’Alene, a city of about 44,000 people located in the middle of the mountains of northwest Idaho, just across the border from Spokane, Wa. ”
The fastest growing markets, therefore, were the places expected to see the most growth in home prices in addition to other attractive amenities. Top of the list was Coeur d’Alene, a city of about 44,000 people located in the middle of the mountains of northwest Idaho, just across the border from Spokane, Wa. After Coeur d’Alene, Austin, Texas, came in at No. 2. Austin wasn’t the only Sun Belt city on the list: Reno, Nevada, (# 7) and Santa Cruz, California (# 10) also featured. But the rest of the top 10 in the Emerging Housing Markets Index were spread across the country. The list includes cities in New Hampshire, Ohio, and Montana. As for the top 50 cities in the index, less than half were located in the Sun Belt. Market Ranking 1 Coeur d’Alene, Idaho 2 Austin-Round Rock, Texas 3 Springfield, Ohio 4 Billings, Mt. 5 Spokane, Wa. 6 Lafayette-West Lafayette, Ind. 7 Reno, Nev. 8 Concord, NH 9 Manchester-Nashua, NH 10 Santa Cruz-Wilsonville, California (Realtor.com is operated by News Corp NWSA, -0.26% subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp. The Wall Street Journal is also a unit of Dow Jones). To some extent, this nuance of the index is a reflection of its focus on house price growth, said Danielle Hale, chief economist at Realtor.com. In these markets, “the demand is really high and the supply is also relatively tight,” Hale said. “They are not oversupplied.” That’s in contrast to the broad Sun Belt region, where “builders have done a better job of keeping up and building, so they don’t have the same supply constraint,” Hale added. However, the new index points to broader migration trends taking place across the country that are prompting the emergence of new real estate hotspots – how the Sun Belt came to dominate US real estate. Over the past 50 years, it has experienced significant population growth. States like Florida and Arizona became popular retirement destinations, especially when central air conditioning became commonplace. The year-round warm climate also makes the region popular with tourists.
States like Florida and Arizona became popular retirement destinations, particularly when central air conditioning became commonplace. ”
“These areas have had tailwinds for 30 years or more,” said Edward Pinto, director of the Housing Center at the American Enterprise Institute. “And those tailwinds have only gotten stronger.” In addition to the warm climate, other attributes in these states have made them popular with migrants from other parts of the country. These states generally have lower tax burdens, particularly for income taxes, and have generally offered strong labor markets, Pinto said. And, echoing Hale, Pinto noted that they have managed to maintain a steady pace of home construction. “Even taking growth into account, they are still building much more than the rest of the country,” he said. As a result, home prices have remained relatively affordable, making them attractive to Americans looking to relocate. The Impact of COVID-19 Even before the pandemic, markets outside the Sun Belt were starting to heat up. St. George, Utah, Bend, Ore. And Coeur d’Alene were among the top 20 counties nationally based on percentage increase in net migration, Auction.com vice president of market economics Daren Blomquist said, citing data from the U.S. Census Bureau. Interest from real estate investors has followed those immigrants. “We’re seeing real estate investors buying from Auction.com gravitate toward these markets and rural markets in general,” Blomquist said. What is so attractive about these markets in the northwest and mountainous west?
“‘Before the pandemic, migration was driven by affordable housing, low taxes and an attractive lifestyle for outdoor enthusiasts, but it was limited to markets close to many jobs.’ ”- Auction.com Vice President of Market Economics, Daren Blomquist
Many of them have more temperate climates, but they have all four seasons. Its location in more rural and mountainous areas means that residents can make use of outdoor activities such as hiking, climbing and skiing more easily than in other parts of the country. Also, most of these cities are still small compared to the major metropolitan areas, which means they offer a slower and quieter lifestyle. “It seems to fit in with what I’m going to call the New American Consumer,” said Bill Dallas, a veteran of the mortgage industry and president of Finance of America Mortgage. “This area is probably the next big hotspot.” Dallas says this region represents the fastest growing area for his company, although it is not yet the most dominant by volume. “Their big states are still Texas, California, New York and Florida,” he said.
“The Rocky Mountain region has a particular appeal for people leaving the high-cost housing markets along the West Coast. The high cost of living in the Golden State is pushing people out. ”
But the changes brought about by the pandemic are influencing where people want to live. The rise of work from home, in particular, is meant to allow new markets a chance to be the center of attention. And many of those markets are located in the broader Rocky Mountain-Northwest region, according to housing experts. “Before the pandemic, migration was driven by affordable housing, low taxes and an attractive lifestyle for outdoor enthusiasts, but it was limited to markets close to many jobs,” Blomquist said. “After the pandemic, that limitation of access to jobs has been removed for many thanks to the wider acceptance of remote working.” The Rocky Mountain region has a particular appeal for people leaving the high-cost housing markets along the West Coast. People in places like San Jose and Los Angeles would likely be inclined to move inland to California first, Pinto said. But the high cost of living in the Golden State is pushing people out. Many of them are moving to more remote destinations like Boise, Idaho, where they can easily work remotely, but can also take a short flight back to their company headquarters when needed. Americans continue to move to the Sun Belt in droves, as the latest census figures show. In fact, Texas and Florida will receive more representation in Congress starting with the next election, in honor of their growing population.
“The tailwinds that contributed to the Sun Belt’s rise have not gone away, even if it now has competition from other parts of the country. ”
The tailwinds that contributed to the Sun Belt’s rise have not gone away, even if it now has competition from other parts of the country. “The popularity of the Rocky Mountain and inland Pacific Northwest regions won’t come at the expense of the Sun Belt, which still has strong positive net migration trends thanks to many of the same underlying forces of affordable housing, low taxes, and access to jobs, ”Blomquist said. And there may be limits to the popularity of smaller, more remote locations like Boise or Billings, Ma. Some of these areas have literal limitations, like a small water supply, which could put a limit to how much their populations could grow, Hale said. Also, smaller markets like Coeur d’Alene, Boise, or Bozeman, Montana, could become victims of their own, somewhat newfound, popularity. Millions of people currently live in expensive markets along the West Coast that could save money by moving. “You don’t have to have a lot of them wanting to leave in a given year to overwhelm a place like Boise,” Pinto said.