US Cities With the Most Undervalued (and Overvalued) Housing

If you are buying a home, you want to know your market. In some areas, house prices are rising faster than in the rest of the local economy. When this happens, housing in the area becomes overpriced. Forbes has compiled a list of the most overvalued and undervalued markets in the States.

To rank these markets, Forbes analyzed the 50 most populous urban areas in the country. They then compared the area’s economic growth to the rise in the value of houses in the area. They explain:

Fitch has compiled a list of the five most overvalued and undervalued housing markets in the country for FORBES based on its most recent quarterly resilient home price model, which compares home price trends with local market fundamentals including income growth, unemployment rate, and more. population, mortgage rates, rental prices, consumer demand and inventory levels. When house prices rise faster than the rest of the local economy, housing becomes overvalued. When homes are sold at prices lower than the local economy can handle, housing is undervalued.

In the past few years, you may have heard that Texas is the place to live if you want to buy a home at an affordable price. Forbes explains that house prices are now outpacing economic growth in some areas of the state:

Austin Metro’s gross metro product grew 24% from February 2011 to the end of last year – not bad, yes, but below the 34% rise in home prices over that period … Houston presents an even more dramatic case: although Metro Gross Product has grown by 23% from February 2011 to the end of last year, home prices jumped 43% … The mismatch between economic growth and home values ​​is unlikely to improve in these Texas cities anytime soon.

This does not mean that a housing bubble looms on the horizon in these places. Instead, Forbes predicts that house prices are likely to stagnate as economic growth slows. Here’s a list of the five most underrated and overrated cities to live in:

Overrated

1. Austin, TX
2. Houston, TX
3. Phoenix, Arizona.
4. Riverside, California.
5. Miami, Florida.

Underestimated

1. Detroit, Michigan.
2. Cleveland Ohio
3. Providence, Rhode Island
4. Warren, Michigan.
5. Newark, NJ

Keep in mind that the list is based on house prices and economic growth only, so the cost is strictly relative to the current housing market in the area. To find out more, check out the full Forbes article at the link below.

America’s Most Overvalued and Undervalued Home Markets | Forbes

More…