There’s no place like home — but some “places” are better than others.
Key factors like cost of living, crime rates, climate change, local issues, and property taxes can make or break your budget. Whether you’re saving for a house, waiting for mortgage rates to drop, or planning a big move, diving into market research now is the smartest move.
“While no one can predict the market with absolute certainty, the patterns we’re seeing now offer some valuable clues,” Yawar Charlie, estates director at Aaron Kirman Group at Christie’s International Real Estate and star of CNBC’s “Listing Impossible,” told Yahoo Finance.
Based on the latest market trends, GOBankingRates got the inside scoop from top experts on which states to steer clear of if you’re looking to buy property in the next five years. Find out why these states are on the no-go list.
California: A pricey paradise
California’s got it all — stunning scenery, vibrant culture, perfect weather. But don’t let the allure fool you. Affordability is a major roadblock.
“As a real estate broker in Los Angeles, I’ve observed some trends that suggest certain states might become less attractive for homebuyers over the next five years,” spills Charlie.
“It’s not just the high cost of living here that’s a problem. The state also struggles with issues like wildfires and droughts, which can make homeownership even more challenging and expensive,” Charlie explains.
And it doesn’t stop there. “The tech boom, especially in areas like the Bay Area, has driven housing prices to astronomical levels, pushing many to seek refuge in more affordable states,” Charlie adds.
Rachel Stringer, a realtor at Raleigh Realty, added: “Demand continues to outpace supply, keeping inventory tight drastically.
“This supply crunch, coupled with slow wage growth, raises affordability concerns over time,” she says. “As costs rise faster than incomes, keeping up with mortgage payments could become increasingly difficult.”
Bottom line? California’s golden promise might be turning into a pricey pitfall for would-be homeowners. Proceed with caution!
Florida: Sunny but stormy
Retirees flock to Florida for its sunny skies, but beware — one bad storm can turn paradise into peril.
“The state’s location makes it extremely vulnerable to hurricanes and rising sea levels driven by climate change,” Stringer says.
Homeowners face serious issues like skyrocketing insurance premiums, costly rebuilds, and major disruptions due to storm damage. Coastal properties could lose significant value if rising sea levels make them uninhabitable, Stringer warns.
Dreaming of a Florida home? Better brace yourself for the stormy side of the Sunshine State.
Illinois: High taxes and high crime
Illinois, known for its bustling cities and agricultural heartland, is facing serious economic challenges, warns Charlie.
“Illinois, and specifically Chicago, faces significant financial woes,” he cautions. “The state has some of the highest property taxes in the country, and Chicago is grappling with a high crime rate and budget deficits, leading to cuts in essential services and increased taxes.
““These financial strains make it difficult for residents to justify staying when they could find a safer and more financially stable environment elsewhere,” Charlie says.
Louisiana: Climate concerns
Louisiana’s allure lies in its vibrant culture and culinary delights, but Tony Mariotti, founder of RubyHome, advises caution for prospective real estate investors.
“Louisiana is highly susceptible to climate change impacts, such as hurricanes and flooding. These risks can lead to higher insurance costs and potential property damage,” he said.
“The state also struggles with lower job growth and economic diversification, making it less attractive for long-term investments. Infrastructure issues add to the challenges of property ownership here.”
New Jersey: Taxing times
Thinking of investing in the Garden State? You might want to think twice, warns Charlie.
“Besides the high property taxes, New Jersey is dealing with an exodus of major corporations, which impacts job availability,” Charlie says.
“The state also has some of the highest health insurance premiums in the country, adding another layer of financial stress for residents. Furthermore, the congestion and traffic, especially for those commuting into New York City, can be a daily frustration.”
New York: Big costs in the Big Apple
New York remains a high-priced state with more issues than just the price tag.
“Beyond the high property taxes and cost of living in New York City, there’s also the matter of aging infrastructure,” Charlie noted.
“The subway system, for example, has been notorious for delays and breakdowns, making daily commutes a headache. Plus, the pandemic has shifted many jobs to remote work, reducing the need to live in or near the city and prompting many to relocate to suburban or even rural areas.”
West Virginia: Economic decline
Meanwhile, West Virginia, traditionally coal country, is facing economic devastation as the industry declines, explains Stringer.
As jobs disappear, small towns are seeing population declines, resulting in reduced demand for housing. Homeowners may find it challenging to attract buyers willing to pay fair prices.
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