Buying a home? Here's what you need to know. From the cheapest cities to the best time to buy, here's everything you need to know if you're considering buying a home.
Three metropolitan areas —Phoenix, Las Vegas and Stockton, California — are among the 10 most overvalued housing markets in the nation, according to a new report published by Florida Atlantic University (FAU) and Florida International University (FIU). The three had been among the places most harmed by the housing collapse more than a decade ago.
Homes in Phoenix and Las Vegas are selling at a 42% premium and homes in Stockton, California are commanding a 38% premium compared with past pricing history.
The nation’s most overvalued market is Boise, Idaho, where homes are selling for 81% more than they should, according to the report.
“We never suspected Boise, Idaho, would be the most overpriced market in the U.S.," says Ken Johnson, a real estate economist and associate dean in FAU’s college of business, who co-authored the report. "They're truly a boomtown, especially the run-up in the last 12 to 18 months and their pricing."
Johnson, along with Eli Beracha, a professor at FIU’s Hollo School of Real Estate, analyzed the nation’s 100 largest metro areas using publicly available data from Zillow, Realtor.com, Redfin and the Federal Housing Finance Agency.
When the COVID-19 pandemic gave many employees the opportunity to work remotely from home, they left expensive markets in California to live in cheaper places like Boise, says Johnson.
"We think we're entering the peak of our current real estate cycle,"" says Johnson. "No ones really wants to buy at the top of the current cycle. And because of that, we're encouraging people to consider renting similar property and re-investing monies into a portfolio of stocks and bonds."
If you are looking for a home as an investment, Honolulu could be ripe for a bargain. It is currently undervalued by 5%.
“During the pandemic, it's actually been very difficult to get to Hawaii to vacation,” says Johnson.
He believes timeshare units and second homes are being put on the market, causing a short-term oversupply of homes.
Other markets on the undervalued list include Virginia Beach, Va., (-2.46%), Baltimore, Maryland, ( -1.7%), New York, New York (-0.8%) and Baton Rouge, Louisiana (0.4%).
People who buy in these markets should feel comfortable because home prices, on average, appear to have room to grow — based on past pricing behavior, according to Beracha.
Top 10 U.S. overpriced housing markets
1. Boise, Idaho -- 80.64%
2. Austin, Texas -- 50.72%
3. Ogden, Utah -- 49.70%
4. Provo, Utah -- 46.16%
5 . Detroit, Michigan -- 45.57%
6. Spokane, Washington -- 45.21%
7. Salt Lake City, Utah 42.41%
8. Phoenix, Arizona -- 42.31%
9. Las Vegas, Nevada -- 41.88%
10. Stockton, California -- 38.50%
Read more on USA Today.
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