There are many factors to consider when buying a home, and evaluating factors like cost of living, crime rate, climate change, local issues and property taxes can help you save money.
Whether you’re saving to buy a house, waiting for mortgage rates to fall or planning a big move in the next few years, researching the market now can help you decide where to invest later.
“While no one can predict the market with absolute certainty, the patterns we’re seeing now offer some valuable clues,” said Yawar Charlie, estates director of Aaron Kirman Group at Christie’s International Real Estate and cast member of CNBC’s “Listing Impossible.”
Based on current market trends, GOBankingRates spoke with experts who shared which states to avoid buying property in the next five years and why.
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California
Stunning scenery, a vibrant culture and near-perfect weather make California so appealing, but the affordability is an issue.
“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,” Charlie told us.
“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,” he explained.
“Additionally, 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.”
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 explained. “As costs rise faster than incomes, keeping up with mortgage payments could become increasingly difficult.”
Florida
For many retirees, Florida is a sunny paradise, but one bad storm can quickly make things a nightmare.
“The state’s location makes it extremely vulnerable to hurricanes and rising sea levels driven by climate change,” Stringer told us.
“Serious considerations include rebuilding costs, disruptions and escalating insurance premiums due to storm damage. Coastal properties may lose substantial value if they become uninhabitable due to rising sea levels.”
Illinois
Known for its big cities and expansive farmlands, Illinois is a major manufacturing center for food, chemicals, rubber products and more.
According to Charlie, though, the state is in trouble:
“Illinois, and specifically Chicago, faces significant financial woes,” he said. “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.”
Louisiana
With its reputation for good times, delicious food and rich culture, Louisiana is a state people enjoy. However, according to Tony Mariotti, founder of RubyHome, you might want to rethink real estate investments there.
“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
New Jersey is another East Coast state you might steer clear of when buying property.
“Besides the high property taxes, New Jersey is dealing with an exodus of major corporations, which impacts job availability,” Charlie explained. “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
Another infamously high-priced state is New York, which Charlie revealed has major issues beyond the cost factor.
“Beyond the high property taxes and cost of living in New York City, there’s also the matter of aging infrastructure,” he 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
West Virginia is known as a coal country, but the industry is declining, which has “economically devastated many parts,” Stringer said. “As jobs dry up, the population drains in these small towns, leaving little demand for housing. Homeowners may struggle to find buyers willing to pay a fair price.”
Source: Yahoo News