Home Prices Have Risen Rapidly in Rural Vacation Areas
Home prices rose at an unprecedented pace following the start of the pandemic. In prior research, we showed how home price growth over this period was especially rapid in more outlying areas of the US, including in rural counties. In a new working paper building on this analysis, we examine what kinds of rural communities saw the greatest price appreciation. Using data on home values in non-metro counties, we find that prices in rural areas increased 36.1 percent between March 2020 and March 2023, doubling the rate of appreciation in the three years preceding the pandemic. But in counties with a high share of vacation and second homes—places that often have high natural amenity values and strong tourism industries—prices rose an even faster 46.8 percent.
The substantial growth in home prices has been driven in large part by an influx of people to rural areas. The proliferation of remote work during the pandemic allowed workers to move further from their place of employment. As a result, net domestic migration—an important driver of housing demand—turned positive in non-metro counties for the first time in at least a decade. Before the pandemic, from 2017 to 2019, rural areas saw a net loss of 77,900 residents. But from 2021 to 2023, that trend flipped dramatically, with rural communities gaining a net 540,400 people.
As a result, home prices rose exceedingly quickly in rural areas across the country. And prices appreciated especially sharply in rural counties of the West and Northeast. In the three years following the start of the pandemic, typical home values rose 40.7 percent on average in non-metro counties in the West and 40.5 percent in non-metro counties in the Northeast (Figure 1). Prices also rose substantially in the rural South (35.5 percent) and Midwest (31.4 percent). By comparison, home price growth was more modest in every region during the pre-pandemic period, ranging from 13.6 percent in the Northeast to 20.9 percent in the West.
Figure 1: Rural Home Prices Have Risen Rapidly in Every Region
Sources: Author tabulations of Zillow Home Value Index; US Census Bureau, 2019 American Community Survey 5-Year Estimates.
Net domestic migration was especially strong in vacation counties, where more than one-fifth of the housing stock is vacant for seasonal or occasional use. Vacation counties represent about 14 percent of non-metro counties in our sample and are especially common around the Great Lakes in the upper Midwest, in mountain communities in the Northeast and Mountain West, and near beach towns along the East and West Coast. In these counties, home values rose an astounding 46.8 percent from March 2020 to March 2023, up from 17.4 percent in the three years preceding the pandemic. In rural vacation counties, home prices rose more rapidly in every region (Figure 2). In the three years following the pandemic, home prices rose 51.1 percent in vacation counties in the West, 50.9 percent in the Northeast, 47.5 percent in the South, and 37.4 percent in the Midwest.
Figure 2: In Rural Areas, Prices Rose Faster in Vacation Counties Across All Regions
Note: Data are for non-metro areas only. Vacation counties have more than 20 percent of the housing stock vacant and available for seasonal, recreational, or occasional use.
Sources: Author tabulations of Zillow Home Value Index; US Census Bureau, 2019 American Community Survey 5-Year Estimates.
In the paper, we also report on the kinds of rural areas that had the strongest price appreciation in the aftermath of the pandemic, looking especially at important indicators of rurality and urbanization. In regression models, we confirm the rapid price appreciation in vacation counties, while also showing home prices rose modestly more in counties adjacent to metro areas, with lower densities, and with smaller urban populations.
Vacation areas with strong tourism industries often rely on seasonal, low-wage service workers. For these workers and many existing households, rising housing costs and the limited supply of housing can be a particular strain made worse by strong domestic migration. Additional public support could address the immediate needs of these residents including property tax abatements, housing vouchers, first-time homebuyer assistance, and other forms of housing and non-housing assistance targeting lower-income households. Moreover, rural housing markets present unique obstacles to homebuilders—from high infrastructure development costs to a limited construction workforce—even as the need to build additional homes increases. If domestic migration trends persist and more people continue to flow into rural areas, the need to produce both market-rate housing and more affordable housing types, such as manufactured homes, at scale in rural places will only become more pressing.
