What 2021s Best Places to Live in the US Say About Homebuying

This morning, U.S. News & World Report updated its list of Best Places to Live in the United States. While Boulder, CO remained No. 1 for the second consecutive year, a significant shakeup in the top 5 sheds light on the effects of the pandemic and rising home prices on where people prefer to live.

Immediately obvious is that the country’s most expensive metros for housing -- like San Francisco, Seattle, Boston, and Denver -- all fell multiple places on the list. Meanwhile, the newcomers to the top five were small to mid-sized metros with median home prices below the national average.

While housing affordability (value) is just one of the five data indexes used to create the list, the results are an interesting look into just how much Americans weigh affordability against desirability, job market, and quality of life.

Rocky Mountain bye

A quick glance at this year’s top five versus last year’s reveals an obvious trend. Despite claiming four spots in last year’s top five, Colorado metro areas (except for Boulder) took a noticeable tumble down the rankings.

• Colorado Springs dropped two spots to number six
• Denver dropped 12 spots to number 14
• Fort Collins dropped 12 spots to number 17

And it’s not like the Rocky Mountains got any less rocky in 2021. Colorado’s metro areas excel in desirability and quality of life scores, thanks to an abundance of natural beauty and outdoor recreation. However, their value scores suffer due largely to high home prices.

While the job market may have taken a hit with pandemic shutdowns in the recreation, tourism, and service industries, it can’t be ignored that the median home price for Colorado metros are above the national median.

The smaller and more affordable Colorado Springs only fell two places, while Denver and Fort Collins each dropped 12 places. Boulder maintained the top spot not because it’s less expensive (it’s actually the most expensive of the four) but because the median income is nearly $70,000 per year, suggesting the job market is able to support high home prices.

How the mighty have fallen

While it’s only one state, Colorado seems to depict a larger national trend of expensive metro areas becoming less desirable than their smaller and more affordable counterparts.

On a national level, the hottest and most expensive housing markets all took significant tumbles.

• San Francisco dropped five spots to number 15
• Seattle dropped six spots to number 19
• Boston down 13 spots to number 31
• Los Angeles dropped 29 spots to 126

Some of this is due to pandemic-related unemployment. Most notably, Boston had a monthly average unemployment rate of nearly 9% in 2020, resulting in a 13 spot plummet in the rankings. However, unemployment had a larger impact on metros that rely heavily on tourism, such as Las Vegas (50 spot drop), San Diego (52 spot drop), and Honolulu (42 spot drop).

Tech-heavy cities like San Francisco and Seattle, where many employees shifted to remote work during the pandemic, also experienced healthy drops in the rankings. It seems with home prices surging and remote work on the table, these cities lost some of their allure.

Affordable cities ascend

Perhaps more telling than the metros that moved down the rankings are the cities that moved up, especially the newcomers to the top five. Small- to mid-sized metros with affordable housing and good job opportunities replaced Colorado’s scenic but expensive metros.

Most notable are the hefty ascents for Huntsville, AL -- up 12 spots to number 3 -- and Raleigh & Durham, NC -- up 9 spots to number two.

The median home price in Huntsville in 2020 was just $192,667 -- well below the national median -- despite solid job prospects at NASA and the U.S. Army’s Redstone Arsenal. While it’s desirability index is just 5.5 out of 10, value (8.7) and job market (8.1) more than make up for it.

Meanwhile, Raleigh & Durham trading places with Denver provides an insight into what Americans are looking for in a place to live in 2021.

Despite similar size and job market index scores, Raleigh & Durham’s value clearly trumps Denver desirability in 2021.

The same is true in the comparison between Fayetteville, AR -- another newcomer to the top five -- and Fort Collins.

The two metros are similar in size and have nearly the same job market index scores, yet Fayetteville is considered a better place to live despite its rather low desirability index score.

What the Best Places to Live say about homebuyers

The pandemic and the red-hot housing market are not only changing where people buy homes, but the very definition of a good place to live.

It’s very telling that despite increased mobility, less “desirable” metro areas (sorry Fayetteville and Huntsville) are considered the better places to live, largely on the back of affordability.

If anything, it reveals that there is indeed a breaking point for how much people will pay to live. And many of the former best places to live have reached that point and are giving way to new areas.

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