An analysis of the various factors that influence home prices has revealed that potential buyers should consider which states they should avoid.
The cost of living, crime rates, property problems, local situations and recent climate change are just some of the factors that can determine which states have better living conditions than others.
“While no one can predict the market with absolute certainty, the patterns we are seeing now provide some valuable clues,” said Yawar Charlie, managing director of estates for the Aaron Kirman Group at Christie’s International Real Estate. Yahoo Finance.
Real estate experts have now started sharing their opinions on current market trends on GOBankingRates.
The seven states the experts highlighted in their research span nearly every region of the U.S., including places hard hit by heat waves and natural disasters.
Cost of living, crime rates, property problems, local situations and recent climate change are just some of the factors that can determine which states have better living conditions than others.
California
The tech boom in areas like San Francisco has sent home prices soaring in California, contributing to a key reason why homebuyers are looking to move elsewhere
This year, California has seen more than 5,000 wildfires and massive heat waves, but for residents of the Golden State, affordability is the biggest issue.
However, Charlie, a Los Angeles real estate agent, explained that “wildfires and droughts” are issues that threaten Yahoo Finance’s affordability.
He added that the recent “tech boom” is also a problem that is keeping companies and potential homebuyers from considering moving to California.
“The tech boom, especially in places like the Bay Area, has driven up housing prices to astronomical levels, causing many people to seek refuge in states with lower rents,” Charlie said.
According to Raleigh Realty broker Rachel Stringer, supply is also tight because demand “continues to outstrip supply.”
“This supply crisis, combined with slow wage growth, is leading to concerns about affordability in the long term,” Rachael explains.
‘As costs rise faster than income, it may become increasingly difficult to continue making mortgage payments.’
The average price for a home in California was initially nearly $845,000, but as of April 2024, the average price is now over $900,000.
Florida
Florida coastal real estate is not only expensive, but also at risk of significant damage from climate change and rising sea levels.
Miami could be a problem in the summer because of higher prices, a real estate expert told GOBankingRates.
“The state’s location makes it extremely vulnerable to hurricanes and rising sea levels due to climate change,” said Stringer, a real estate manager at Yahoo Finance.
‘Serious considerations include reconstruction costs, disruptions and rising insurance premiums as a result of storm damage.’
The agent added that properties along the coast could “significantly decline in value” due to damage from natural disasters.
Not only can this lead to a decrease in value, but it can also become impossible to live there, depending on sea levels.
Illinois
Illinois residents have fled the state to live in more financially stable areas, in part because of high property taxes.
Illinois is a popular state known for its urban and agricultural environment, but Charlie emphasized how much of a problem housing has, especially in Chicago.
“Illinois, and Chicago in particular, is in serious financial trouble,” Charlie said.
“The state has some of the highest property taxes in the country, and Chicago struggles with high crime rates and budget deficits, leading to cuts to essential services and higher taxes.”
He added that the state’s financial problems make it difficult for residents to want to stay in Illinois and they are looking for a stable living environment elsewhere.
According to Zillow, the median home value in Illinois is $269,000, which is lower than California and Florida.
However, that number is more than 6 percent higher than last year.
Louisiana
RubyHome founder Tony Mariotti urged potential homebuyers to consider moving to states other than Louisiana despite the decline in home prices
According to Zillow, home prices in Louisiana are down 2.5 percent compared to real estate prices in the state in 2023.
However, RubyHome founder Tony Mariotti urged potential homebuyers to consider living in states other than Louisiana.
“Louisiana is very vulnerable to the impacts of climate change, such as hurricanes and flooding,” Mariotti told Yahoo Finance.
‘These risks can lead to higher insurance costs and potential property damage.’
The entrepreneur also pointed out that Louisiana is struggling with “lower job growth and economic diversification,” which could impact long-term investment.
New Jersey
New Jersey currently has a tax rate of 2.26 percent, which is significantly higher than the national average
One downside to owning a home in New Jersey is the high property tax rate. According to SmartAsset, it currently stands at 2.26 percent, while the national average is less than one percent.
“In addition to high property taxes, New Jersey is also experiencing an exodus of large corporations, which is impacting job availability,” Charlie said.
The broker also pointed out that New Jersey’s health insurance premiums are among the highest in the U.S., creating “even more financial hardship for residents.”
Currently, the average price of a home in New Jersey is over $550,000, which is 151 percent higher than the average price of a home in the US.
New York
New York has a lower property tax rate than New Jersey, but infrastructure is a concern for residents
New York’s property taxes are lower than New Jersey’s, but some residents are still concerned.
It is also one of the five states in the US where residents have to spend a significant amount of money annually.
“In addition to the high property taxes and high cost of living in New York City, there’s also the issue of aging infrastructure,” Charlie said.
‘For example, the metro system is known for its delays and disruptions, making the daily commute a headache.’
Charlie added that homeowners have also moved to other suburbs or rural areas in the U.S. as their jobs in New York remained remote following the COVID-19 pandemic.
West Virginia
West Virginia’s declining coal industry has left areas of the state ‘economically devastated’
West Virginia’s declining coal industry has left many areas of the state “economically devastated.”
Stringer pointed out that there are fewer jobs, which is causing the population of West Virginia’s small towns to decline.
“Homeowners may have difficulty finding buyers willing to pay a fair price,” Stringer adds.
While the average price in West Virginia is just over $168,000, this is an increase of 5.7 percent since 2003. The median sales price has increased by almost $30,000.