Evaluation of home prices in 299 metropolitan areas
A new study has been done that lists the relative values of homes in 299 different markets across the US. The study can be found at National City Corporation’s Economic Insight page (look for the Housing Valuation Analysis section). This is very valuable information for investors to have. If you are buying real estate to hold onto, you probably don’t want to be buying in over valued areas.
Some interesting quotes from the study:
- As of the first quarter of this year, 53 metro areas representing 31 percent of the total U.S. housing
market are extremely overvalued and confront a high risk of future price correction.- California and Florida have the highest concentration of overvalued housing markets, as do parts of the
Greater New York and Greater Boston areas.
You don’t want to be holding homes in areas where there is a danger of “future price correction”. The 5 top over-valued markets are:
- Naples, FL (79%)
- Santa Barbara, CA (74%)
- Merced, CA (72%)
- Salinas, CA (70%)
- Stockton, CA (69%)
The five most under-valued markets are:
- College Station-Bryan, TX (-20%)
- El Paso, TX (-17%)
- Huntsville, AL (-14%)
- Killeen, TX (-13%)
- Montgomery, AL (-13%)
[...] To say that there is not even the possibility of a housing bust is just plain sticking your head in the sand. We have seen reports of many markets with a greater than 50% chance of price drops, and reports that show “53 metro areas representing 31 percent of the total U.S. housing market are extremely overvalued and confront a high risk of future price correction.” To ignore these types of reports is just plain dangerous. [...]