It’s no surprise that rustbelt cities have floundered in the wake of factory closures and businesses moving manufacturing overseas, and that continues to have an adverse effect on housing prices.
“The Northeast and the Midwest regions have consistently ranked in the bottom tier, over the last three to four years,” Rick Palacios Jr., director of research at Irvine, Calif.-based John Burns Real Estate Consulting told Forbes. “A big part of that is that job growth has not come back to those markets. When we rank out how the country is doing from a housing perspective, those regions continue to under-perform [in terms of housing investment].”
The list, compiled by Fitch for Forbes, includes the five most undervalued housing markets in America, based on Fitch’s quarterly Sustainable Home Price mode, which weighs home price trends against economic factors in each market, including income growth, employment rates, population growth, mortgage rents, and rent prices to determine value.
And it should surprise no one that Detroit is ranked the most undervalued market.
According to Fitch, Detroit is undervalued by 17 percent, despite a price growth rate of 66 percent since March 2011. Prices are still 23 percent lower than pre-crisis peaks.
The second most undervalued city is Cleveland, Ohio at 16 percent. Prices have grown 12 percent since they bottomed out in February of 2012, however.
Providence, Rhode Island comes in at the number three spot. It is undervalued by 12 percent, despite 10 percent price growth since September 2012.
Of course, Detroit isn’t the only Michigan city to find itself on this list. Warren, Michigan, comes in at number four, undervalued at 8 percent. Warren has bounced back considerably since September 2010, with prices jumping 42 percent.
Rounding out the list at the number five spot is Newark, New Jersey. Prices have spiked 11 percent since March 2012 but are still considered undervalued by eight percent.