Study: 15 Housing Markets Overvalued by More Than 50 Percent
The high cost of housing across the country is playing out in once-remote markets and major metropolitan areas, making homeownership unattainable for many Americans and a risky bet for others.
Four U.S. housing markets are overvalued by more than 60 percent, while 11 others are overvalued by more than 50 percent, according to the latest study from researchers at 抖M女仆 and .
Boise, Idaho, long considered a distant outpost far from big-city job centers, leads the nation in overpriced housing, with more people discovering the area while working remotely during the pandemic. Boise鈥檚 pricing history suggests homes now should cost an average price of $299,202, although the typical buyer is paying $516,548 鈥 72.64 percent above the area鈥檚 long-term pricing trend.
No. 2 Austin, Texas is quickly gaining ground, with buyers paying 67.70 percent more than they should. Buyers in Ogden, Utah (64.73 percent) and Las Vegas (61.48 percent) also are paying significant premiums to live there.
Atlanta, Phoenix and Provo, Utah lead a contingent of communities overvalued by more than 50 percent. Meanwhile, No. 8 Fort Myers, Florida, formerly known as a vacation and retirement haven south of Tampa, has fast become synonymous with unaffordable housing. It moved into the Top 10 for the first time.
The full rankings with interactive graphics can be found .
鈥淣ear-record-low mortgage rates helped fuel demand for housing, especially during the pandemic, and the competition for homes pushed prices higher. But now the Federal Reserve is raising rates to curtail inflation, and already that鈥檚 cooling demand,鈥 said , Ph.D., an economist in 抖M女仆鈥檚 .
A looming slowdown could help people priced out of the market get into homes, but it also may be a serious concern for some consumers, Johnson added.聽聽
鈥淚f we鈥檙e not at the peak of the current housing cycle, we鈥檙e awfully close,鈥 he said. 鈥淩ecent buyers in many of these cities may have to endure stagnant or falling home values while the market settles 鈥 and that鈥檚 not what they want to hear if they had planned to resell anytime soon.鈥
Each month, Johnson and , Ph.D., of FIU鈥檚 , rank the most overvalued housing markets of America鈥檚 100 largest metros by determining the premiums buyers are paying. The larger the premium, the more overpriced a market is. The researchers鈥 data dates back to 1996 and covers single-family homes, townhomes, condominiums and co-ops.
The rankings do not consider how expensive a market traditionally is. The two high-cost housing markets of New York and San Francisco, for example, are among the least overvalued in the country because homes in those two metros still are selling relatively close to where they should be, based on historical trends.
Shoddy underwriting and a glut of homes on the market led to the housing crisis of 2006 to 2011, but those aren鈥檛 factors now, according to Beracha.
鈥淚n the prior downturn, many homes lost half of their values, but I don鈥檛 think we鈥檒l see anything close to that this time around,鈥 he said. 鈥淪till, it could be painful for many consumers who are buying near the top of the market.鈥
Beracha and Johnson said outcomes from this housing crisis will vary across the country, with growing population centers suffering less from price declines but being saddled with prolonged affordability issues. Metros with stagnant or falling populations, however, will most likely take bigger hits to home prices but have far fewer issues with housing affordability.
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