Real Estate Pros Flag States With Growing Homebuying Risks Over Next 5 Years
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] offer some valuable clues," said Yawar Charlie, estates director of Aaron Kirman Group at Christie's International Real Estate.
Based on market trends, we spoke with experts who shared which states to avoid buying property in the next five years and why.
Find Out: 10 Dangerous Cities Where You Shouldn't Buy a Home
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1. 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."
In addition, Charlie said, "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."
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2. 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 said. "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."
3. 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."
4. 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."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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