US News state rankings give insight into where each state stacks up in many lifestyle, political, and economic categories including health care, education, economy, opportunity, infrastructure, crime and corrections, fiscal stability, and quality of life. And while many syndicates claim to have discovered the holy grail of real estate investing in the form of an infallible algorithm, the truth is no one has a tool that can accurately predict the future of real estate prices. But in regard to the rankings assigned by US News, is there any correlation between any of these categories and real estate prices in corresponding states? We ranked each state by median home price, then performed linear regression analyses between each category and home price ranking to determine if there is in fact a correlating category that could be influencing real estate prices, and consequently, determine where real estate prices would be likely to go up based on local trends that could potentially raise a state’s ranking in relevant categories. Here’s what the numbers suggest:

OVERALL R^2 Value Correlation
Health Care 0.411 Moderate
Education 0.1685 Weak
Crime & Corrections 0.1355 Weak
Economy 0.108 Weak
Fiscal Stability 0.017 None
Opportunity 0.0115 None
Infrastructure 0.0001 None
Quality of Life 0 None
HEALTH CARE
Public Health 0.497 Moderate
Health Care Quality 0.2526 Weak
Health Care Access 0.0473 None
PUBLIC HEALTH
Low Obesity Rate 0.6135 Strong
Low Mortality Rate 0.5217 Strong
Low Smoking Rate 0.5197 Strong
Low Infant Mortality Rate 0.321 Moderate
Mental Health 0.2021 Moderate
Low Suicide Rate 0.0202 Weak
HEALTH CARE QUALITY
Preventable Admissions 0.3959 Moderate
Nursing Home Quality 0.1664 Weak
Medicare Quality 0.075 None
Fewest Hospital Readmissions 0.0489 None
HEALTH CARE ACCESS
Adult Dental Visits 0.2266 Weak
Health Care Affordability 0.0966 Weak
Child Dental Visits 0.0391 None
Health Insurance Enrollment 0.0179 None
Adult Wellness Visits 0.0163 None
Child Wellness Visits 0.0031 None
EDUCATION
Higher Education 0.1216 Weak
Pre-K – 12 0.0348 None
HIGHER EDUCATION
Educational Attainment 0.4328 Moderate
4 Yr College Grad Rate 0.0502 None
Low Debt At Graduation 0.0107 None
Tuition and Fees 0.0093 None
2 Yr College Grad Rate 0.0007 None
PRE-K – 12
NAEP Math Scores 0.1334 Weak
College Readiness 0.101 Weak
HS Grad Rate 0.0549 None
NAEP Reading Scores 0.0483 None
Preschool Enrollment 0.0422 None
Pre-K Quality 0.0017 None
CRIME & CORRECTIONS
Corrections 0.2097 Weak
Public Safety 0.0405 None
CORRECTIONS
Low Incarceration Rate 0.266 Weak
Sexual Violence in Prisons 0.0758 None
Least Juvenile Incarceration 0.0625 None
Low Recidivism Rate 0.0311 None
Equality in Jailing 0.0281 None
PUBLIC SAFETY
Low Violent Crime Rate 0.0711 None
Low Property Crime Rate 0.0143 None
ECONOMY
Business Environment 0.2464 Weak
Employment 0.1095 Weak
Growth 0.0226 None
BUSINESS ENVIRONMENT
Venture Capital 0.2572 Weak
Entrepreneurship 0.2347 Weak
Patent Creation 0.1824 Weak
Low Tax Burden 0.0349 None
Top Company Headquarters 0 None
EMPLOYMENT
Labor Force Participation 0.2111 Weak
Job Growth 0.0801 None
Low Unemployment Rate 0.0032 None
GROWTH
Net Migration 0.0458 None
GDP Growth 0.0387 None
Growth of Young Population 0.0019 None
FISCAL STABILITY
Long Term Fiscal Stability 0.0123 None
Short Term Fiscal Stability 0.0046 None
LONG TERM FISCAL STABILITY
Pension Fund Liability 0.0125 None
Government Credit Rating Score 0 None
SHORT TERM FISCAL STABILITY
Liquidity 0.0227 None
Budget Balancing 0.0015 None
OPPORTUNITY
Economic Opportunity 0.3323 Moderate
Equality 0.0217 None
ECONOMIC OPPORTUNITY
Household Income 0.5576 Strong
Low Poverty Rate 0.3605 Moderate
Low Food Insecurity 0.2462 Weak
Gini Index 0.02 None
EQUALITY
Income Gap by Gender 0.2365 Weak
Employment Gap by Race 0.1294 Weak
Education Gap by Race 0.0834 None
Income Gap by Race 0.0504 None
Disability Employment Gap 0.0269 None
Employment Gap by Gender 0.0039 None
INFRASTRUCTURE
Internet Access 0.0491 None
Transportation 0.011 None
Energy 0.0085 None
INTERNET ACCESS
Broadband Access 0.09999 Weak
Ultra-Fast Internet Access 0.0226 None
TRANSPORTATION
Public Transit Usage 0.2968 Moderate
Commute Time 0.1279 Weak
Road Quality 0.1276 Weak
Bridge Quality 0.0994 Weak
ENERGY
Electricity Price 0.122 Weak
Power Grid Reliability 0.0596 None
Renewable Energy Usage 0.0011 None
QUALITY OF LIFE
Natural Environment 0.029 None
Social Environment 0.0087 None
NATURAL ENVIRONMENT
Low Pollution Health Risk 0.2218 Weak
Low Industrial Toxins 0.1014 Weak
Urban Air Quality 0.0457 Weak
Drinking Water Quality 0.0002 None
SOCIAL ENVIRONMENT
Community Engagement 0.0747 None
Voter Participation 0.01 None
Social Support 0.0077 None

As you can see, very few categories demonstrate a correlation between their rankings and median home prices with the exception of several public health categories, household income, and educational attainment. While this likely doesn’t suggest a direct cause and effect relationship, the fact that there is a correlation between some categories and median home prices alludes to a possibility for predicting where some state’s markets are likely to outperform the national average based on which states are trending in the positive direction for relevant categories. While there is little data on general health trends by state over the years, it’s safe to assume that public health is a direct product of educational attainment and household income, so we’ll only be examining those two categories instead.

US news defines educational attainment, “The achievement of college degrees in any state is a measure of how well the educational system has prepared its citizenry for advanced study beyond high school and enabled students to succeed.” Interestingly, this refers to the quality of high schools in each state, not necessarily universities. The top-ranking states in positive change in high school education over the last three years are as follows:

PUBLIC SCHOOL RANKINGS 2016 – 2018

State Total Rank Change
Washington 28
Colorado 22
Ohio 14
Florida 13
Idaho 13
Minnesota 12
Oklahoma 12
Wisconsin 11
Utah 10
Wyoming 9

As for household income, here are the top ten ranking states in greatest rate of change since 2014:

HOUSEHOLD INCOME RATE OF CHANGE SINCE 2014

Rank State Total Change
1 Washington 26%
2 Tennessee 24%
3 Arizona 22%
4 South Carolina 22%
5 D.C. 21%
6 Mississippi 21%
7 Indiana 21%
8 Colorado 20%
9 Alabama 20%
10 Ohio 19%

So, assuming these trends continue, Washington, Colorado, and Ohio, being the only three states in the top ten in both likely influential categories, expect the median home price to exceed the national average in these three states in the near future. To reference descriptions and explanations for any categories, visit https://www.usnews.com/news/best-states, or if you have any questions or would like to see our full data lists for this study, please contact our Director of Marketing at tommyw@realestatebackops.com.

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