The U.S. real estate market varies greatly from state to state, and some areas face economic, environmental, or policy challenges that can impact property value over the long term. By weighing local economic health, climate risks, and regulations, you can make smarter, more resilient investments in the current property market. Based on current trends and expert analysis, here are 20 states that real estate agents suggest may be less favorable for property investments in the next five years, along with key insights on each state.
California
Challenges: High property prices, significant taxes, and wildfire risks.
Tip: Invest carefully in regions with wildfire mitigation plans and strong employment prospects.

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New York
Challenges: High taxes, especially in urban areas like NYC; limited space for new development.
Tip: If investing in New York, consider smaller, upstate cities where prices are more stable.

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Illinois
Challenges: Declining population, high property taxes, and a struggling economy.
Tip: Look for suburban areas around Chicago if you want to invest in Illinois, as some show promising growth.

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New Jersey
Challenges: High property taxes, increasing insurance rates, and rising sea levels affecting coastal areas.
Tip: Inland cities are better bets; avoid coastal investments due to potential flood risks.

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Connecticut
Challenges: High taxes, a shrinking economy, and low population growth.
Tip: Consider more affordable and growing states nearby, like Massachusetts or Rhode Island.

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Hawaii
Challenges: Limited land, high living costs, and reliance on tourism.
Tip: If you’re looking to invest, focus on properties popular with long-term residents rather than seasonal tourists.

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Louisiana
Challenges: High flood risk, hurricane vulnerability, and low-income growth.
Tip: Seek areas with improved flood protection, but consider states with a better economic outlook.

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Rhode Island
Challenges: High property taxes, small market, and expensive cost of living.
Tip: Smaller investment properties may perform better, especially for seasonal rentals in coastal areas.

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Oregon
Challenges: High taxes, wildfire risks, and increasing housing regulations.
Tip: If considering Oregon, explore less regulated suburban and rural areas outside Portland.

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Maryland
Challenges: High property taxes, environmental risks for coastal properties.
Tip: Avoid high-risk flood zones and look for opportunities in tech-driven areas like around Washington, D.C.

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Massachusetts
Challenges: Expensive real estate market, high cost of living, and high property taxes.
Tip: Research smaller towns outside Boston where prices are steadier and more affordable.

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Vermont
Challenges: Limited job market and growth, high cost of living.
Tip: Look for investment properties that cater to the seasonal tourist market if investing in Vermont.

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Michigan
Challenges: Slow economic growth, high property tax rates, and fluctuating housing demand.
Tip: Research college towns like Ann Arbor that offer more stability and rental potential.

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Nevada
Challenges: High levels of housing speculation, drought risks, and water scarcity concerns.
Tip: Properties outside of Las Vegas may offer better returns in stable communities with lower investor speculation.

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Alaska
Challenges: Limited economic growth, high costs for importing goods, and a volatile oil market.
Tip: If interested, consider rental properties in areas with stable populations, like Anchorage.

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Mississippi
Challenges: Lower property values and income growth, frequent storm and flood risks.
Tip: Choose areas with significant redevelopment projects, but carefully evaluate flood maps.

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West Virginia
Challenges: Low property values and demand, slower economy, and limited infrastructure.
Tip: College towns like Morgantown may offer more stability and rental opportunities.

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New Mexico
Challenges: High property crime rates, water scarcity issues, and limited economic growth.
Tip: Consider Santa Fe, where there’s consistent demand, but stay cautious about overall growth trends.

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Maine
Challenges: High property taxes, slow job growth, and seasonal market challenges.
Tip: Seasonal rentals near the coast can be profitable, but year-round markets are limited.

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Kentucky
Challenges: Low appreciation rates, high poverty rates in some areas, and slower economic growth.
Tip: Areas around Louisville and Lexington may have better growth prospects than rural parts of the state.

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