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 second 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. Montana, Arizona and Idaho rank fourth, fifth and sixth, 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 has been 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 36th in the index based on spring 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 second quarter of 2021:

1. Utah. Its home values jumped 28 percent in the 12-month period that ended June 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. New Hampshire. The geographic oddity in our ranking, New Hampshire saw home values jump 22 percent, and the unemployment rate and tax burden are low.
3. Washington. The state experienced 22 percent home price appreciation, and just a tiny fraction of homeowners are behind on their mortgages.
4. Montana. Home prices rose 24 percent in the past year, and Montana has the nation’s lowest level of past-due mortgage payments, according to the Mortgage Bankers Association.
5. Arizona. Home values surged 24 percent, and few homeowners have fallen behind on their loans.

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 second quarter rose to a whopping $1.7 million, according to the National Association of Realtors. The typical price in Salt Lake City was $485,100 — 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 June. However, some state economies are struggling with weak job growth and other challenges. The bottom 5 on our index:

• 47. Washington, D.C. The district ranked in the middle of the pack in several measures but was weighed down by weak job growth.
• 48. Mississippi. Low ranks in price appreciation and past-due mortgages placed Mississippi near the bottom of the pack.
• 49. West Virginia. The state posted comparatively tepid appreciation of 12 percent, along with weak job growth.
• 50. Oklahoma. The state ranked near the bottom in home price appreciation and job growth.
• 51. Louisiana. It ranks worst in past-due loans, with nearly 9 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 second quarter of 2021, Bankrate analyzed six data points:

• annual home price appreciation for the second quarter as reported by the Federal Housing Finance Agency’s Home Price Index;
• share of mortgages past due for the second quarter as reported by the Mortgage Bankers Association;
• unemployment rate for June from the U.S. Labor Department;
• annual job growth as of June 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 second quarter of 2021

State	Overall rank	Appreciation rank	Past due loans rank	Job growth rank	Unemployment rank	Cost of living rank	Tax rank
Alabama	41	35	43	34	7	8	41
Alaska	38	51	20	15	39	47	3
Arizona	5	3	6	31	40	26	24
Arkansas	46	40	37	43	19	3	45
California	19	11	11	27	46	49	49
Colorado	11	12	12	18	35	35	21
Connecticut	22	13	41	12	47	44	47
Delaware	34	34	33	25	33	34	13
District of Columbia	47	32	32	47	43	51	46
Florida	21	17	38	39	26	25	4
Georgia	27	22	45	27	12	10	31
Hawaii	36	42	16	7	47	50	38
Idaho	6	1	40	12	5	19	20
Illinois	43	44	39	21	44	21	36
Indiana	23	30	34	27	16	12	9
Iowa	39	47	7	39	12	16	40
Kansas	35	27	30	43	8	17	35
Kentucky	31	33	28	36	19	7	19
Louisiana	51	49	51	43	41	15	42
Maine	9	7	25	4	23	39	29
Maryland	44	39	49	10	35	45	44
Massachusetts	16	18	18	3	24	48	34
Michigan	10	20	17	11	26	4	14
Minnesota	30	38	10	19	12	29	46
Mississippi	48	48	50	34	35	1	32
Missouri	18	23	23	33	17	2	12
Montana	4	4	1	42	8	31	5
Nebraska	33	36	14	38	1	24	28
Nevada	12	14	31	1	50	37	7
New Hampshire	2	9	13	9	3	41	6
New Jersey	24	16	48	2	44	43	50
New Mexico	45	41	27	48	51	23	23
New York	32	25	47	5	47	36	48
North Carolina	15	19	24	19	22	13	10
North Dakota	42	50	8	39	12	33	17
Ohio	37	28	29	46	28	6	39
Oklahoma	50	45	44	51	8	9	30
Oregon	7	10	4	22	32	40	15
Pennsylvania	26	26	36	16	41	27	27
Rhode Island	13	5	26	7	34	46	37
South Carolina	29	21	35	36	21	18	33
South Dakota	17	37	2	23	3	20	2
Tennessee	14	15	21	27	24	5	18
Texas	25	24	46	24	38	14	11
Utah	1	2	5	14	2	30	8
Vermont	8	6	19	5	6	42	43
Virginia	28	29	22	31	17	28	26
Washington	3	8	3	16	28	38	16
West Virginia	49	46	42	49	30	11	22
Wisconsin	20	31	9	25	11	22	25
Wyoming	40	43	15	50	31	32	1