The Great Western Expansion: Utah, Idaho and Nevada Cities Lead Luxury Segment of Emerging Markets
Sparked by the coronavirus pandemic, top-tier housing in smaller cities is thriving, according to the inaugural rankings by The Wall Street Journal and Realtor.com.
By Liz Lucking | Mansion Global
Summit Sotheby's International Realty
The stampede to domestic scenic hotspots amid the coronavirus pandemic has created a cohort of booming luxury markets in U.S. vacation destinations that were once under the radar.
Provo-Orem, Utah; Coeur d'Alene, Idaho; and Reno, Nevada, are the top three high-end markets to watch, according to the luxury segment of the inaugural Wall Street Journal/realtor.com Emerging Housing Markets Index, released Tuesday.
The purpose of the index is to identify areas “that are good places to buy homes because the housing markets are doing well,” Danielle Hale, chief economist for realtor.com, told Mansion Global. “But it’s not just about the housing market. It's about being able to enjoy life there and that's true for these luxury markets.”
The index uses a mix of indicators to assess the prosperity of emerging housing markets, which include growth in housing supply and demand; median listing prices; unemployment; wages; a cost of living measure; small businesses; amenities and the share of foreign-born residents—who contribute to the vitality and diversity of the area.
The 60 metropolitan areas reviewed within the luxury segment of the Emerging Housing Markets Index—which covers the top 1% of each market—are ranked based on the weighted sum of those metrics to conclude which have the hottest high-end markets.
“The fact that we’re seeing markets that are not in the biggest cities, but a bit more remote and that have high quality of life, is a reflection of how people's demands have shifted because of the pandemic,” Ms. Hale said.
One of the most significant real estate trends to have emerged from the coronavirus pandemic has been the migration away from major metropolitan areas to secondary cities and second-home markets. With an ability to work and attend school remotely, many wealthy buyers have turned to those locales, which offer more bang for their buck, outdoor space, privacy and easier access to nature.
In Utah, the real estate market in the Provo-Orem metropolitan area ranked top of the index.
There is no shortage of high-end properties for sale in the two neighboring cities, some 45 miles south of Salt Lake City. The most expensive, according to realtor.com, is a $25 million compound with a bass-filled lake, a motocross course and a state-of-the-art motorcycle maintenance shop.
“Last year was my biggest year,” said Brian Olsen, of Coldwell Banker Realty’s Provo-Orem and Sundance office. “I didn't have more sales, but I did more volume than I've ever done.
“I’m getting Californians, New Yorkers, South Carolinians and Texans,” as well as people from elsewhere in Utah, Mr. Olsen said.
Summit Sotheby's International Realty
Many buyers were already drawn to the area for its bustling nearby technology corridor, dubbed “Silicon Slopes,” but the coronavirus pandemic added to its appeal.
Not only has Covid-19 resulted in more remote work—and more location flexibility—but more disposable income for many affluent buyers, Mr. Olsen said. “With quite a few of the deals I closed last year, it was because people's incomes had jumped since Covid,” he said. “Last year was the first time I had multiple offers on million-dollar properties.”
The top item on luxury buyers’ shopping lists is a view, according to Mr. Olsen. “I had a guy and he was from California and he said “Brian, look I wake up and I see the ocean. If I'm going to spend $3 million in Utah, I want to see the mountains.”
The area’s natural amenities are also a top attraction for buyers, he said, whether it be that they want to live on a lake, a river or somewhere with a larger piece of land.
The top trio of cities are nestled between the West Coast and the Rocky Mountains, a swath of the U.S. that has seen its real estate markets flourish, according to Ms. Hale.
“They’re similar climate wise, and they’ve attracted a lot of tech workers escaping the high cost and other drawbacks of the Bay Area and Seattle,” she said. “That's one reason we’re seeing these markets do really well.”
In Coeur d’Alene, in northwest Idaho, close to the Washington border, migration from the West Coast is driving the city’s “exploding” high-end market, according to Connie Nelson of Tomlinson Sotheby’s International Realty.
“To give you some perspective, in 2020 a $1 million-plus home sold every day. There were 365 sales over $1 million last year; there were 145 total sales $1 million and over in 2019,” Ms. Nelson said. “Since Covid hit, luxury buyers have been flooding into the area. We don’t have the inventory to serve them well, so everything that has hit the market regardless of price has sold, often for over asking price.”
One of last year’s sales in Kootenai County—home to Coeur d’Alene—was a record-breaking $27.5 million deal on Lake Coeur d’Alene, the most expensive home to change hands in the Gem State.
“There appears to be a mass migration from the Western states in particular: Washington, Oregon and California, largely due to the political climate. California in particular is implementing taxation laws that are driving people out of that state and many are coming to Idaho,” Ms. Nelson said. “The number of out-of-state license plates is very noticeable in our community now.”
For many buyers relocating from busier locales, Coeur d’Alene offers a “more peaceful way of life,” according to Ms. Nelson, and the outdoor recreation options are plentiful with winter and summer activities on offer, including hiking, biking, boating, fishing and skiing.
Looking to make the most of the outdoors, buyers are looking for “waterfront, water view or acreage property for privacy, and higher-end finishes and homes in general,” Ms. Nelson said. “However, the luxury buyers also have the money to do what they want, so are also buying old homes on the water and rebuilding what they want.”
Looking ahead, the high demand from buyers in these areas is going to continue stoking price gains, realtor.com’s Ms. Hale said, while noting that transactions “are a bit more of a wild card,” given the limited supply of homes for sale.
“A lot is going to depend on how much those priorities stick with us,” Ms. Hale said. “And how much some of the flexibility people enjoy now becomes the normal way of doing business.”