Is California to blame for Idaho, Utahs soaring home prices?

[ad_1]

The western states of Utah and Idaho have been close contenders for top states in the nation for their raging housing markets.

The metro areas of Salt Lake City and Boise were recently ranked the No. 1 and No. 2 markets in the nation, respectively, by Realtor.com for their forecasted markets headed into 2022 based on predicted sales and price increases.

As those prices continue to soar and as both states see in-migration adding to their population, in addition to natural growth eyes locally and nationwide are turning, perhaps resentfully, to whats happening in a major state to the west: California.

California, a state gripped by a housing affordability crisis, ranking the second lowest in the nation (above only Hawaii) for its cost of living and housing affordability. California, where the pandemic spurred an out-migration as tens of thousands fled high home prices in search of more space at lower price points.

Idaho, in particular, has been among the most impacted states in the nation.

For the past several years, Idaho has been one of the fastest-growing states, with the largest share of new residents coming from California. In April of 2021, Idaho topped a list from Atlas that showed states with the most inbound moves, with 66% of inbound moves. The Californians are coming. So is their housing crisis.

Idaho has made national headlines for its popularity with Californians. Last year, the New York Times published an article titled, The Californians Are Coming. So Is Their Housing Crisis, which highlighted Idaho as a state particularly impacted by Californians migration.

This fact can be illustrated with census data, moving vans or resentment, the New York Times wrote. Go Back to Cali graffiti has been sprayed along freeways in Boise, the Idaho News reported. There, the last election cycle was a referendum on growth and housing, and included a fringe mayoral candidate campaigned on a promise to keep Californians out, the New York Times reported.

Over the last year, new census data shows Idahos net-inmigration jumped by almost 50,000, Robert Spendlove, a senior economist for Zions Bank, recently told KTVB7, an outlet in Idaho.

Thats a huge jump and its a huge impact on the Idaho market, so that is driving the demand for home prices, Spendlove told KTVB7.

However, Spendlove added people moving from California is a contributing factor, not the main factor. He noted people from many other states are also moving to Idaho. Compound that high demand with low inventory, and you’ve got a recipe for more home price growth.

A similar story in Utah

Utah, also a state that has ranked top of the nation for its economic and population growth, is also feeling the effects.

Like Idaho, Utahns have seen staggering home price increases. Housing experts have told the Deseret News its a result of the Wests growth.

While other areas of the nation have begun to stagnate or drain, James Wood, the Ivory-Boyer senior fellow at the University of Utahs Kem C. Gardner Policy Institute, told the Deseret News, the West with its plentiful jobs and relatively more affordable housing is becoming increasingly appealing to Americans leaving big cities in search of more bang for their buck.

But like the economist in Idaho said, Californians arent all to blame for whats happening in Utah, either. The state ranks top of the nation for its economy with among the lowest unemployment rates and its been among the fastest-growing states in the nation for over a decade. So Utahs own population growth adds to the demand and, therefore, the price increases.

However, Utah is still seeing more in-migration recently than it has before.

Population estimates recently released by the University of Utahs Kem C. Gardner Policy Institute indicate that Utahs 2021 net migration was 34,858 almost 10,000 more than 2020s estimate. Its the highest net migration since 2005 and is the seventh year that net migration has been above 20,000, according to the data. Overall, net migration contributed to 59% of Utahs population growth over the past year, up from 49% the year before.

Amid the pandemic, one Utah city in particular saw in-migration: Heber City. The once small city has been one of the fastest-growing towns in the US, and in April it was ranked by the New York Times as No. 5 out of 926 metro areas for the biggest change in net in-migration in 2020.

In Heber City, residents talk anecdotally about how many have moved from California. Real estate agents acknowledge that many have moved from California but many more have also come from other surrounding states.

The in-migration is from everywhere, Tom Wright, whos been a real estate agent in the Heber Valley for about 20 years, told the Deseret News. Is it a California problem? Or a national one?

As prices increase in the West in states like Utah and Idaho, it begs the question, are these states destined for Californias problems?

Thats a difficult question to answer. Dave Anderton, spokesman for the Salt Lake Board of Realtors, recently pondered it in an interview with the Deseret News. Utah is tricky to compare because 80% of its population is condensed to its urban corridor along the Wasatch Front. But to Anderton, the shocking price growth the state saw in 2021 sure makes it seem like the Beehive State is becoming more like the Golden State.

It seems to me that were becoming more like California, Anderton said. When it comes to home prices, were more on a trajectory like California.

But in a larger, national view, its important to consider that perhaps Californias housing crisis isnt just that states problem.

When the New York Times asked Boises Democratic Mayor Lauren McLean if its possible to import Californias growth without also importing its housing problem, she answered: I cant point to a city that has done it right.

Thats because as bad as Californias affordable housing problem is, it isnt really a California problem. It is a national one, the New York Times wrote. From rising homelessness to anti-development sentiment to frustration among middle-class workers whove been locked out of the housing market, the same set of housing issues has bubbled up in cities across the country.

[ad_2]