Nearly half of the 50 biggest markets are overvalued – CoreLogic

In many of the nation’s largest metros, home prices simply aren’t sustainable in the long term, analytics firm says

Nearly half of the 50 biggest markets are overvalued – CoreLogic
Nearly half of the nation’s largest housing markets are overvalued, according to new data.

Of the 50 largest markets based on housing stock, 48% were overvalued, according to a CoreLogic Market Condition Indicators (MCI) analysis. The analysis defines an overvalued market as one in which home prices are at least 10% higher than the long-term sustainable level.

Out of the country’s 100 largest metro areas, 36% had an overvalued housing stock as of September. Twenty-eight percent were undervalued, while 36% were at value.

Frank Martell, president and CEO of CoreLogic, said that while housing demand remains strong, these overvalued markets could cause problems down the line.

“A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate,” Martell said. “While demand and home-price growth is in a sweet spot, a third of metropolitan markets are overvalued – and this will become more of an issue if prices continue to rise next year as we anticipate.”

Home prices across the nation are up strongly both month over month and year over year, according to CoreLogic. Home prices nationally saw a 7% year-over-year increase in September and a 0.9% month-over-month increase. The analytics firm predicts an increase of 4.7% between September of 2017 and September of 2018 and healthy month-over-month growth.

“Heading into the fall, price growth continues to grow at a brisk pace,” said Dr. Frank Nothaft, CoreLogic’s chief economist. “This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices.”

Related stories:
CoreLogic to provide single-family data to the HUD
CoreLogic: 9.1 million Californian homes at risk from wildfires