Editor’s Note: This story originally appeared on SmartAsset.com.
Home ownership is often seen as a cornerstone of investing and building wealth. While real estate markets vary from city to city, home values have risen over the decades.
In fact, home prices across the United States have risen about 17% over the past year, rising to $298,933 by the end of July 2021, according to Zillow. But appreciation is just one financial component of home ownership.
Closing costs, property taxes, and insurance are also factors that influence whether home ownership is a good investment for a potential buyer.
With real estate markets still red, SmartAsset set out to determine which states are best for homeowners. We compared all 50 states across 10 metrics: median home value, home value estimate, home value to family income ratio, foreclosures per 10,000 homes, average annual homeowners insurance, burglary rate, and average annual property taxes , effective property tax rate, average closing costs and average closing costs as a percentage of the average home value.
This is SmartAsset’s seventh study on the best cases for homeowners. The 2020 version can be found here. For a breakdown of our data sources and how we bring all the information together to create our final rankings, read the Data and Methodology section at the end.
Here are the best states for homeowners.
Nowhere in the United States did home values increase more between July 2020 and July 2021 than in Idaho, where home prices rose 34.60%.
Idaho also has the fifth lowest foreclosure rate in the country, at just 0.21 per 10,000 homes, which contributes to its position at the top of the rankings.
Meanwhile, the Gem State has the eighth lowest average annual home insurance ($940) and ninth highest median home value ($308,236).
Utah ranks second in this study thanks in part to a 26.84% increase in home values between July 2020 and July 2021 (the third highest overall).
Utah also ranks high for median home value ($376,455), the sixth highest in our study.
The state’s average annual homeowner’s insurance is the fourth lowest in the state ($711), while closing costs are just 1.26% of median home value, the ninth lowest in all 50 states. Utah also has the 10th lowest effective property tax rate (0.58%).
3. New Hampshire
Home values in New Hampshire rose more than 21% between July 2020 and July 2021, the eighth highest in our study.
Meanwhile, the Granite State has the lowest burglary rate (126.3 per 100,000 residents) and the fifth lowest average annual home insurance ($773).
Maine is in the top ten on three different scales. The pine tree state had the fourth largest increase in home values in the country between July 2020 and July 2021, when home values rose 22.27%.
Maine also has the fourth lowest burglary rate (174.8 per 100,000 residents) and the sixth lowest average annual home insurance ($849).
The median home value in Massachusetts is $444,127, the fourth highest among all 50 states. Meanwhile, closing costs in Massachusetts are 1.06% of median home value, the fifth lowest in the study.
Like New Hampshire and Maine, the Bay State also has a relatively low burglary rate, about 179 burglaries per 100,000 residents (the fifth lowest).
Closing costs in Oregon are only 1.05% of the median home value, the fourth lowest in the entire study.
Oregon also has the sixth lowest number of foreclosures per 10,000 homes (0.27) and the seventh highest median home value ($381,871).
Montana ranks fourth in lowest foreclosure rate (0.20 per 10,000 homes) and tenth lowest in lowest closing costs as a percentage of median home value (1.32%).
Home values in Montana rose 20.66% between July 2020 and July 2021, the 11th highest estimate across the entire study. Meanwhile, the median value of a home in Big Sky Country is $304,190 (15 of the highest gross).
8. Rhode Island
Fourth New England state in the top ten this year, Rhode Island has relatively low closing costs compared to median home values (1.16%), the seventh lowest overall.
For those who might consider switching from renting versus buying here, two other important points to consider are that Ocean State has the tenth highest median home value ($314,588) and tenth highest estimate between July 2020 and July 2021 (20.72%) .
Washington state, which has the third highest median home value ($434,216) in the country, saw home values rise 22.01% between July 2020 and July 2021 (the sixth largest increase). Closing costs in Washington are 1.09% of the median home value, the sixth lowest in the study. Meanwhile, Washington has the 10th highest foreclosure rate in the country, just 0.38 per 10,000 homes.
Colorado has the third lowest effective property tax rate (0.49%), while closing costs average 1.02% of median home value, also the third lowest.
Colorado also has the fifth highest median home value in the country ($421,063). More specifically, Aurora, Colorado, ranked in our recent study of the 10 largest emerging real estate markets in the United States.
Data and methodology
To find the best cases for homeowners, we compared data for all 50 states across a total of 10 metrics. A full weight has been given for six of these scales, as shown below:
- Average home value. The data comes from the 2019 American Community Survey conducted by the Census Bureau.
- home valuation. This is the percentage change in median home value from July 2020 to July 2021. The data comes from Zillow.
- Home value to household income ratio. This is the median home value divided by the median household income. The data comes from the 2019 American Community Survey conducted by the Census Bureau.
- Mortgage foreclosures for every 10,000 homes. The data comes from SoFi and is for July 2021.
- Average annual homeowners insurance. The data comes from ValuePenguin and is for August 2021.
- burglary rate. This is the number of burglaries per 100,000 residents. The data comes from the FBI and is for 2019.
We assign half a weight to the remaining four scales:
- Average annual property taxes. The data comes from the 2019 American Community Survey conducted by the Census Bureau.
- Effective property tax rate. This is the average annual property taxes paid divided by the average home value. The data for both components comes from the 2019 American Community Survey conducted by the Census Bureau.
- Average closing costs. The data comes from the SmartAsset closing costs calculator as of August 2021.
- Average closing costs as a percentage of the average home value. This is the average closing costs divided by the average home value. The data comes from SmartAsset’s closing costs calculator and from the 2019 American Community Survey conducted by the Census Bureau.
We ranked each state on each scale, and using the weights described above, we found the average rank of each state. From there, we created the end result.
The state with the best average rating got a score of 100 while the state with the worst average rating got a score of 0.
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