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Welcome to the Commercial Real Estate Mastery podcast, where you'll learn the correct way to identify, negotiate, perform due diligence on, renegotiate, finance, turn around and operate real estate in today's market -- a market in which volatility creates opportunity, and sound principles defeat fads and bubbles. And your host is a 25-year commercial real estate veteran and co-owner of over $1 billion in real estate assets, Frank Rolfe.
We all know what hot means. It means desirable; it means trending; in demand. And in the world of real estate, when we talk about something being hot, we're typically talking about a hot location. This is Frank Rolfe, the Commercial Real Estate Mastery Podcast. We're going to review the concept of properties being hot as well as the reverse, properties which are not. And we're going to focus just on one thing, geography. Because real estate's all about location, location, location. So let's see if we can define, based on the current stats in America, where the hotspots are for investing.
Let's first start off with population gain, because many times one of the big drivers to a hot market are people moving in at a faster rate than they're moving out. And that's called net population gain. And when you have the population gaining in size, obviously through the laws of supply and demand, the demand is growing and that makes prices go up. So based on the current stats in America, strictly based on population gain, you have the following states: Texas, Florida, North Carolina, Georgia, South Carolina, and Tennessee. That seems to be where people are going.
Now, why are they going there? Well, some observations. Number one, taxation. Because three of those six states have no personal income tax: Texas, Florida, and Tennessee. Another one would be people moving to the south because they like warmer temperatures. All of those states have warmer temperatures, warmer than most. But if we're based strictly on population gain, if we want to talk about hot real estate states, that's what it would be. But of course, there's more than just population gain. You could have people move in in one year, and then the next year they kind of move out.
So another thing that keeps people living there and makes people want to move to a certain state is the economy, job creation, how strong and consistent the economy is. And based on that right now in America, the top states are Florida, Texas, Utah, Idaho, North Carolina, and Nevada. Kind of a different set of states, except there was a little overlap there. Texas, Florida, and North Carolina, they all made the top list on economic vitality and population gain. So that's a pretty good grouping. But yet there are other factors that make a state hot. Some people say that the hot states, if we were really basing population movement, economic vitality, it would be reflected in single-family home price, because where people are moving, with supply and demand, should make home prices go up.
Well, if we go strictly by home price gains in the year of 2025, then it would be Connecticut, New Jersey, Illinois, Wyoming, and Rhode Island. Now you might say, wait, stop, stop the presses. That list has nothing to do with the other two lists. And I would say that's because that probably is no longer a good measure of a state's hotness. Because a lot of that movement into Connecticut and New Jersey and Rhode Island was because of issues in New York City. So with Mamdani elected as the first socialist mayor of New York City, many people who lived in New York fled to neighboring states. And that caused a lot of that movement to Connecticut, particularly Connecticut. When Mamdani was elected, in the first week after the election, the housing market in Connecticut boomed.
People were paying an average of $50,000 more the day after the election per home than they were the day before. So that one I can't really use as a reliable source of what makes a market hot. But then you also have positive public relations, areas that we assume are hot and therefore it's kind of a self-fulfilling prophecy. If we all are brainwashed to think an area is hot, well, then that must make people want to move there and invest there and make prices go up. And if you look at what people spend on PR as well as naturally how PR has grown in some states, well, then your most positive PR states would be California, because it's always where all of Hollywood is focused; Colorado, the old Rocky Mountain high; Washington, which has gotten a lot of positive publicity over time; Texas again, there it is; Florida, yep, once again; Tennessee, mostly focused on Nashville, of course; and then South Carolina.
There's so many shows on TV right now all about living in Charleston and that type of thing, Southern Comfort and all these different shows like that. Now the final item, which is very, very macro, but right now what's hot in states are the red states, just because politically they seem to have lower taxes and lower restrictions on real estate and generally are just more in favor right now. I've seen it both directions. I've seen it when blue was also the popular color, but right now it appears to be red. So when you add it all together, what does it mean? What's hot? Where are things trending? If you were looking at investing in real estate right now, where would you want to be looking?
Well, the coastal south, that's a hot area. Coastal South encompasses most of those states we said in the first category of population gain. North Carolina, South Carolina, Georgia, Florida, Texas, these are all places that people are flocking to. And so the Coastal South is very, very hot. Also, you have some degree of hot, even though it doesn't make any of the other lists, in Colorado because Colorado is a state that always seems to be a place that people think positively of and are moving there. So you'll always find a lot of positive investment vibe coming out of Colorado. And then of course, the red states on a macro level seem to be very popular. And really anything that's to the south, if you take the US map and cut it in half, a north half and a south half, most people are moving from the northern side to the southern side.
So then what's not hot? Well, it's the reverse of everything I just said. It would be the blue states, the northern states, states where it's colder, areas to the west side of the US right now have suddenly become not quite as hot. But what's important when you think about hot in real estate is you have to remember it always goes in cycles. If we had had this little conversation, well, five years ago, we would have had a different set of states. Five years before that, still another different set of states. I've seen eras in which New Mexico is incredibly hot, as it was not that long ago, a decade or so ago. But what always seems to happen is we see markets that go from hot to cold and then back to hot.
And I think the moral for investors then, if we believe that markets can be hot, which they can, is the smart investor buys into those markets before they get hot or when they're on the opposite side of the cycle. So if you really wanted to invest in a state like South Carolina, the optimal time would be when South Carolina isn't hot, because then whatever you buy will go up in value enormously when suddenly it's rediscovered and people love it again. So when we think about the concept of a hot market, we also have to think of the timing of the hot market. It's great when the market's hot after you already own a property in it, but not so good when you're looking at buying, because you're gonna have to pay a higher price than maybe you cared to.
And then you always run the risk of buying at the top and then riding the elevator down as the market no longer has as much popularity. So think about markets right now that you believe in, that you think have a great future, but maybe just aren't on the radar of the average American today. Those are probably the places that you would want to invest in, because as Sam Zell once said, "When everyone's looking left, look right." And when people are always pushing on you saying, "Oh, yeah, this deal's hot, it's in a hot market," does that really translate into profitability, or does that just translate into popularity? This is Frank Rolfe with the Commercial Real Estate Mastery Podcast. Hope you enjoyed this. Talk to you again soon.