Last summer I predicted a second great migration away from the sunbelt and toward the rust belt because climate change would drive people away from insufferable heat, uninsurable properties and, in the case of the desert, scarce water.
It’s still early but we’ve already seen some interesting data points. Just a few months after publishing that piece, Zillow predicted the hottest housing market of 2024 will be Buffalo, New York (!). I was shocked. Their predictions for top 10 markets are above. Note the cluster around the Great Lakes includes #1 through #4.
Last week Redfin published annual price changes from 2022 to 2023 for the top 100 metro areas. I was shocked again to see that, among states outperforming the national average, rust belt states kicked the shit out of sunbelt states. Of the states in my wager, Rust Belt states account for 15 cities outperforming the national average, compared to just five from the sunbelt states.
Three of my sunbelt states didn’t have one city outperforming the average (Arizona, Louisiana and Texas). I am and remain bearish on Texas, but even I was surprised to see a goose egg there given its main attraction is low cost. Ohio had as many overperformers as all five sunbelt states combined.
I wagered on states I’m most bearish on, those that certainly face a bust. But if you look at the less threatened states of the sunbelt, you this trend persists. States I wouldn’t necessarily bet against underperform states that aren’t wholly in the rust belt (or even safe from extreme weather), but are at least far from insufferable heat.
For what it’s worth, California led all states with its six cities overperforming the average. But I see California as an anomaly given some of it is in the sunbelt, but less prone to extreme heat, while the parts threatened by fire account for a sliver of the population. There are other factors that push and pull, making it one big anomaly.
These data sets are only a snapshot of a narrow window in time. Judging regions by annual gains gives an advantage to low-cost cities (Newark, Camden), making an unfair, “apples to oranges” comparison. Some of this could be a temporary correction after a long boom. I’d argue that’s why Philadelphia is near the bottom with Austin, Denver and New York.
So don’t read too much into it, but it’s an encouraging sign if I’m going to win my wager I’d rather see this than more domination by sunbelt cities.
Fellow nerds can geek out with my data in a spreadsheet.