States on the Rise: What data influences home prices?
Article Highlights:
- If current household income and educational attainment rate trends continue in Washington, Ohio, and Colorado, the rate of change of median home prices in those states will greatly exceed the national average.
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.