In U.S. Markets With Skyrocketing Home Prices but Sluggish Jobs Recovery, How Long Can the Heat Last?

In a gangbusters year for real estate markets across the U.S., resort towns and smaller cities—so-called “secondary markets”—have been some of the biggest winners, seeing an influx of well-off buyers eager for spacious homes in which to ride out the pandemic.

“We’ve been seeing that vacation or resort areas have done very well in the luxury market,” said Danielle Hale, chief economist for realtor.com. “And secondary cities or metros are the ones that are doing the best.”

In some cases, buyers have sped up their plans for retirement, and in others, they’re taking full advantage of indefinite work-from-home policies to move into areas with larger homes, lower prices and more outdoor recreational options than traditional urban centers.

But while a rush of moneyed residents might be a boon for local home prices, it doesn’t necessarily translate into a flourishing overall economy, and in many cases, areas that have seen skyrocketing home prices over the past year have simultaneously seen their unemployment numbers remain stubbornly high; with the unemployment rate, in some cases, still double pre-pandemic levels.

“What’s interesting is people who have moved, they’re not moving their jobs with them, they’re working remotely for wherever headquarters is,” said Redfin chief economist Daryl Fairweather. “But they are contributing to, for example, home renovations, which is an industry that’s been booming across America.”

To get a better sense of how the local economies in some of the nation’s hottest home markets are faring, Mansion Global and the Dow Jones Market Data team compared listing price growth data from realtor.com and metro-level unemployment rates to determine which areas have have the largest disparities between home prices and the local jobs market through January. (Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp.)

Below, a handful of cities where the numbers stood out the most at the start of this year:

Coeur d’Alene, Idaho: Median home price rose 84.8% year over year in January, up to $850,000; unemployment increased from 3.8% to 6.1% from December 2019 to December 2020

Santa Maria-Santa Barbara, California: Median home price rose 60.7% year over year, up to $2.8 million; unemployment increased from 3.6% to 7.6%

Boulder, Colorado: Median home price increased 44.5% in that timeframe, up to $899,000; unemployment more than tripled from 2% to 6.9%

Flagstaff, Arizona: Median home price increased 42.7%, up to $599,000; unemployment increased from 5.5% to 9.6%

Napa, California: Median home price increased 29.3%, up to $1.4 million; unemployment more than doubled from 2.9% to 7.3%

Las Vegas-Henderson-Paradise, Nevada: Median home price increased 35.2%, up to $283,900; unemployment roughly tripled from 3.5% to 10.4%

A high number of metros that topped the list were located in the West Coast and Rocky Mountains, areas around Idaho, Montana, Colorado, Arizona, California, Oregon and Washington, giving some credence to the idea that tech wealth has been radiating out beyond California, bringing home prices up along with it. But the overall picture is more complex.

“It is that influx of folks coming from California, Seattle, Portland and across the country,” said Kathy Denning, a broker with John L. Scott/Luxury Portfolio International in Bend, Oregon, where the median asking price had risen by 23.6% in January compared to a year ago, and unemployment had jumped from 3.2% to 6.8% by the start of this year.

“They’re coming from Texas, Arizona, Chicago, too,” Ms. Denning said. “People are coming in and keeping their jobs, working remotely, and jumping ahead to that end goal of buying a home here 10 years from now.”

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