America’s most overvalued markets

by Justin da Rosa09 Jun 2015
Sunny states make up the majority of the country’s most overvalued markets, with two major markets in Texas considered the country’s most overpriced, despite impressive job growth.

“The issue isn’t that their prices are in a bubble, it’s just that prices grew faster than fundamentals,” explains Stefan Hilts, a director at Fitch Rating’s U.S. RMBS group told Forbes. “That’s why we’re worried about these markets.”

The list, compiled by Fitch for Forbes, includes the five most overvalued housing markets in America, based on Fitch’s quarterly Sustainable Home Price mode. It weighs home price trends against economic factors in each market, including income growth, employment rates, population growth, mortgage rents, and rent prices.

And Texas leads the way.

Austin, Texas (overvalued by 19 percent) takes top, er, honours on the list. However, employment growth has also made great gains since 2007, spiking 21 percent in that time.

Houston falls in at second, with an overvaluation of 18 percent (and employment growth of 17 percent).

Number three is Phoenix, Arizona, where homes are overvalued by 18 percent as well.

Further West, Riverside, California is considered to be overvalued by 17 percent.

Finally, Miami, Florida rounds out the top (or bottom?) five. Its market is considered to be overvalued by 16 percent.

Check back tomorrow for the other side of the coin, as we reveal the top five most undervalued markets in the country.


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