As home prices have continued to rise across the country, particularly in the West, a new study suggests prices are “on the verge of flattening” in five of the country’s “most overvalued markets”. country.
These markets include two cities in Utah and several other subways in Idaho, Texas, and Arizona.
That’s according to a study released this month by professors at Florida Atlantic University and Florida International University.
Where do house prices peak?
- A “crown” of prices is developing in the five most overvalued markets: Boise, Idaho; Austin, Texas; Ogden and Provo, Utah; and Phoenix, ”a Florida Atlantic University article published on December 2. “This indicates that home values in these areas could stabilize. “
“A price crown is common when markets are at the peak of their current real estate cycles,” said Ken H. Johnson, real estate economist and associate dean at Florida Atlantic University’s College of Business, one of the researchers who conducted the study. “It appears that several parts of the country are at an inflection point.”
- In September, researchers at Florida Atlantic and Florida International universities ranked Boise, Idaho, as the nation’s No.1 “overvalued” housing market, calculating the premium homebuyers paid in the 2021 market to 80.6%.
Three cities in Utah and other western subways rank just behind Boise. Here’s how the top 10 most recent rankings were published, according to the university’s online tool.
- Boise, Idaho, where homes are selling at a premium of 80.51%.
- Austin, Texas, at a premium of 57.13%.
- Ogden, Utah, at a premium of 54.46%.
- Provo, Utah, at a premium of 49.18%.
- Phoenix, at a premium of 48.94%.
- Spokane, Wash., At a premium of 47.61%.
- Las Vegas, with a premium of 47.42%.
- Detroit, at a premium of 47.28%.
- Salt Lake City, at a 47% premium.
- Atlanta, with a 45.17% premium.
- “The danger of buying in an overvalued market is that you may have to own the home longer to get significant financial returns,” said Eli Beracha, professor of real estate at Florida International University. “Once the prices have stabilized, it is very difficult to resell the property for a higher return. “
Housing Market Forecast 2022
While research in Florida may give hope to those aspiring to buy a home in the West, other predictors don’t see some Western markets slowing down by 2022.
- Boise’s projections ranked just behind Salt Lake City with a forecast of 12.9% year-over-year sales growth and 7.9% year-over-year price growth.
That’s even though Utah and Idaho have already seen record years as the western housing market continues to rage. In Utah, experts have warned of a “severely imbalanced” housing market as demand continues to outstrip supply.
Although the housing market has cooled slightly as fall and winter approach – a typical seasonal pattern – housing experts are not predicting a stock market crash or seeing any indicator of a ‘bubble’ under current market conditions.
- Unlike what led to the 2007 stock market crash that spurred the Great Recession – when the United States oversized housing and lending practices leading to a subprime mortgage crisis – housing experts say demand continues to outpace supply, especially in fast growing areas like Utah, Idaho, and other western states.