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Where are housing prices set to soar?

The housing market is continuing its already-impressive upward momentum to record-breaking highs. As vaccine distribution ramps up over the summer, economists forecast continued housing prices in many places nationwide. 

A new index produced by communications company Moneypenny, (created by analyzing Zillow data) predicts the states where housing prices are “set to soar,” suggesting that these quickly growing markets could be ripe for investors.

Which will be the wealthiest states by 2025?

By combining each of the three criteria Moneypenny analyzed (please see Methodology section below), California comes out on top, with an impressive index score of 2.71, followed by Massachusetts (2.13), Washington (2.00), New York (1.95) and Hawaii (1.52).

At the other end of the table, Mississippi is forecasted to have the lowest index score by 2025, with just 0.06, while West Virginia (0.09), Arkansas (0.30), Oklahoma (0.35) and Alabama (0.36) complete the bottom five.

How does each state rank by GDP?

In forecasting the economic health of each state, it’s impossible to look beyond the predicted GDP, which impacts housing prices. With a projected GDP of over $3.3 trillion by 2025, California, again, sits top with an impressive perfect score of 1.00. Staggeringly, the Golden State’s GDP index score comes in 50% larger than second placed Texas (0.62), more than twice that of third placed New York (0.49), three times the total of fourth placed Florida (0.33) and four times greater than fifth placed Illinois (0.24).

Ranked lowest in the 2025 GDP index, Vermont and Wyoming failed to even record a score above the minimum 0.00, while Alaska, South Dakota, Montana, Rhode Island, North Dakota, Maine, Delaware and West Virginia each only managed to total 0.01.

The states with the greatest personal income

Personal income is often used to determine household wealth, and it has an important part to play in helping to predict how each state will be faring economically by 2025. Assessing the five strongest performers, according to the index, only California (0.84) offers a break from the East Coast, with the Pacific state sitting fifth behind New Jersey (0.87), New York (0.96), Connecticut (0.97) and personal income leader Massachusetts (1.00).

Turning our attention towards the other end of the index, Mississippi (0.00) is 2025’s prediction for the state with the lowest personal income per capita, with West Virginia (0.07), New Mexico (0.10), Alabama (0.15) and Kentucky 0.16) also making the bottom five.

Average home value by state by 2025

So, where will we find the most valuable properties by 2025, according to Zillow? Analyzing the average predicted value of homes across each of the 50 states, Washington is projected to take the top spot and come away with a maximum index score of 1.00, closely followed by homes in Hawaii (0.98). Finishing off the top five, we have Massachusetts (0.96), California (0.86) and Idaho (0.81).

2025’s most affordable properties are predicted to be found in the state of West Virginia (0.00), while Mississippi (0.04), Arkansas (0.09), Oklahoma (0.09) and Iowa (0.09) all also feature in the lowest-priced five according to the index.

Methodology

To be able to compare states, it’s important to have an index that translates real data into a relative score. Taking existing historical data for real GDP, personal income per capita, and Zillow property prices, Moneypenny forecasted the 2025 values for each state.

Each state has been attributed a value between 0-1 (with 1 being the best positioned) for each of the three criteria, depending on their ranking position. The index determined 2025’s richest state by combining each state’s three assessed scores to give a total value between 0-3.

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