Idaho Is Roaring

“Had someone asked me in March,” wrote economist Megan McArdle in September, “I would have predicted that after six months of pandemic, the housing market would be full of panicked people frozen in their homes, except for those who were being evicted. Instead, the housing market is roaring.”

It continues to roar today. As the Economist observes, those roars are fed by low interest rates, government cash handouts, and a desire of many to move to homes suitable for telecommuting.

Of course, some housing markets are roaring louder than others. As CNN notes, “home prices are rising faster in the middle of the U.S. as Covid drives people away from coasts.” CNN cites home price index data published by the Federal Housing Finance Administration.

I downloaded these data, specifically, the third quarter all-transactions indices for metropolitan areas and for states. These data break out metro areas into divisions such as Miami, Ft. Lauderdale, and West Palm Beach; Oakland, San Francisco, and San Rafael; and Seattle and Tacoma. That results in 404 metro areas ranging from New York to Carson City, Nevada. Metropolitan areas generally include all of the land within county boundaries, both urban and rural, so we can’t use these data to show whether people are moving to suburbs or exurbs.

We can see some larger movements. Most strikingly, Idaho is roaring the loudest of any state. From the third quarter of 2019 to the third quarter of 2020, statewide housing prices grew by 9.8 percent, far more than any other state; the next-highest is Utah at 7.0 percent. Prices rose by more than 10 percent in Boise, Coeur d’Alene, Idaho Falls, and Pocotello. The only other metro area to see a double-digit rise was Cumberland, Maryland.

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Third, in general small- and medium-sized metro areas are doing best. Of the 50 metro areas with populations of 1.5 million or more, only two are in the 50 loudest-roaring housing markets. Those two, Phoenix and Tampa, have low densities and fairly affordable housing markets, so would be attractive to people planning to work out of their homes. Tampa, of course, is not in “the middle.” Only four more of the 50 largest metro areas are in the top 100 roaring markets: Cleveland (!), Columbus, Kansas City, and Indianapolis.

Conversely, large metro areas tend to be doing the worst. Of those same 50 largest metro areas, 31 are in the bottom half of the markets when ranked by home price growth. These include Denver, Milwaukee, and St. Louis, so being in the middle is no guarantee that a metro area’s housing market will be booming.

Finally, Dallas, Houston, and San Antonio are also in the bottom half; I would argue that is because these markets are among the least-regulated in the country which enables them to easily absorb new growth without increasing housing prices. Of course, I would have said the same about Indianapolis, but its prices rose by 6.4 percent.

It will take more research to see what other factors are motivating changes in housing prices. For those who are interested, I’ve uploaded a spreadsheet showing the change in home prices and 2019 populations of all 404 metropolitan areas. The information so far, however, reinforces the notion that the planner’s ideal of a dense city such as San Francisco does not match most Americans’ ideal of a livable home.