Why you should avoid buying property in these states over the next five years, according to real estate agents

Experts have revealed which states Americans should avoid buying real estate in over the next five years.

While some states have beautiful scenery, vibrant cities, or a strong job market, other factors can make them an unwise destination for potential homebuyers.

Rising insurance costs can be a problem in some states, while buying a home in other states can be simply unaffordable for most Americans.

Whether you’re saving to buy a home or waiting for mortgage rates to drop, researching the market now can help you decide where to invest in the future, says real estate agent Yawar Charlie.

“While no one can predict the market with absolute certainty, the patterns we are seeing now provide some valuable clues,” said the president of the real estate division of the Aaron Kirman Group in Los Angeles. GoBanking Rates.

The first state that experts highlight is California.

Los Angeles-based real estate agent Charlie, who also stars on CNBC’s Listing Impossible, said affordability is a major issue.

The median home value in California is $786,938, according to Zillow, compared to a national average of $360,681.

“The technology boom, especially in areas like the Bay Area, has driven home prices to astronomical levels, causing many to seek refuge in more affordable states,” he said.

“And it’s not just the high cost of living that is a problem here,” he added.

“The state is also grappling with issues like wildfires and droughts, which can make owning a home even more challenging and expensive.”

The increasing risk of climate disasters in the state has led a growing list of insurance companies to limit or even halt their operations in the Golden State, driving up the price of customer premiums.

Rachel Stringer, a broker with North Carolina-based Raleigh Realty, told the outlet, “Demand continues to exceed supply in California, keeping inventory tight.

‘This supply crisis, in combination with slow wage growth, will eventually lead to concerns about affordability. Because costs are rising faster than incomes, it can become increasingly difficult to keep up with mortgage costs.’

Florida is the second state that real estate agents are highlighting – largely due to the effects of extreme weather.

“The state’s location makes it extremely vulnerable to hurricanes and rising sea levels due to climate change,” Stringer said.

“Serious considerations include reconstruction costs, disruptions and rising insurance premiums due to storm damage. Coastal properties could lose significant value if they become uninhabitable due to rising sea levels.”

Florida homeowners are already paying the highest premiums for coverage in the U.S., averaging $10,996 per year by 2023. To ensure.

And forecasts from the insurance comparison firm say that will rise another 7 percent this year, pushing the typical premium in the state to as much as $11,759.

Experts also warned against buying real estate in Illinois in the next five years.

Illinois, and Chicago in particular, is facing significant financial challenges, Charlie said.

“The state has some of the highest property taxes in the country, and Chicago faces high crime rates and budget deficits, leading to cuts to essential services and higher taxes.

“These financial strains make it difficult for residents to justify their stay when they could find a safer and more financially stable environment elsewhere.”

Tony Mariotti, founder of luxury real estate company RubyHome, told GoBankingRates that Americans may also want to reconsider making real estate investments in Louisiana.

He also pointed to climate change and the high cost of home insurance as among the main issues.

“Louisiana is highly susceptible to the effects of climate change, such as hurricanes and floods. These risks could lead to higher insurance costs and potential property damage,” he said.

While the state is known for its rich culture and history and delicious food, he pointed out other issues that could deter potential homebuyers.

“The state is also experiencing lower job growth and economic diversification, making it less attractive for long-term investment. Infrastructure issues contribute to the challenges of owning property here,” Mariotti said.

Experts also identified New Jersey as a state to avoid when purchasing real estate.

“In addition to high property taxes, New Jersey is experiencing an exodus of large corporations, which is impacting job availability,” Charlie explained.

“The state also has some of the highest health insurance premiums in the country, adding an extra layer of financial stress for residents.

He added that congestion and traffic, especially for anyone traveling to New York City, can be a daily frustration for residents.

Charlie also warned buyers not to look for property in Jersey’s notoriously expensive neighboring state of New York.

Experts have warned against buying property in states prone to climate disasters such as Florida (Photo: Destruction left in the aftermath of Hurricane Ian in Florida in 2022)

Experts also warned against buying real estate in Illinois in the next five years

“In addition to high property taxes, New Jersey is experiencing an exodus of large corporations, which is impacting job availability,” Charlie said

When it comes to New York City, he warned that there is a problem of aging infrastructure, in addition to the rising cost of living and high property taxes.

‘The metro system, for example, is notorious for delays and disruptions, causing headaches for the daily commute.

“Additionally, the pandemic has shifted many jobs to remote work, reducing the need to live in or near the city and prompting many to move to suburban or even rural areas.”

Stringer, of Raleigh Realty, also ranked West Virginia as one of the worst states to invest in real estate over the next five years.

She noted that the state’s declining coal industry has “economically devastated” many parts.

“As jobs dry up, the population in these small towns shrinks, leaving little demand for housing. Homeowners may struggle to find buyers willing to pay a fair price,” she says.