WASHINGTON, D.C. — It doesn't matter if you're looking in the Midwest, the South or anywhere else in the country, the housing market is still hot.
“There's still quite a big demand for homes for buyers,” said Gretchen Hudson, a real estate agent in Michigan.
That demand for homes is a side effect of the COVID-19 pandemic.
“The price of housing is really through the roof,” said Whit Blanton, executive director of Forward Pinellas, located in the Tampa Bay area of Florida.
Just how high the prices are depends on where you live and how much a property is valued depends on that, too.
“There was really no rhyme or reason, as to East versus West, North versus South,” said Ken H. Johnson, dean of the College of Business at Florida Atlantic University. “Pretty much everywhere has a shortage in inventory right now.”
However, in some places, there are good values still to be found, and in others, Johnson says housing is now “overvalued.”
“We thought this would be good information,” he said.
Johnson and a team of researchers recently looked back at 26 years of housing data. They compared the historic rise in home prices to where they would be expected to be today to see which markets are overvalued.
Here’s what they found.
Of the 100 housing markets they looked at, Boise, Idaho topped the list of overvalued. Home prices there are 80% higher than where they should be, based on the history of home prices there.
Boise is joined by several cities in Utah, like Ogden and Salt Lake City, as well as Austin, Texas, Detroit, Phoenix and Las Vegas, among others.
1. Boise, ID
2. Austin, TX
3. Ogden, UT
4. Provo, UT
5. Detroit, MI
6. Spokane, WA
7. Salt Lake City, UT
8. Phoenix, AZ
9. Las Vegas, NV
10. Stockton, CA
“They can't grow fast enough,” Johnson said of those cities. “So, the supply of housing is at a shortage.”
What does that mean? For sellers, it’s a great time, but for buyers, Johnson had some advice.
“If I was moving to those markets, I would worry about buying at the peak of the cycle,” he said. “I would probably be prone, even though prices might be high, I would be prone to want to rent.”
Yet, there were some deals to be found in certain cities.
One surprise to researchers was Honolulu, Hawaii.
“We were shocked that Honolulu was at the very bottom,” Johnson said. “There's almost a 4% discount to the historical pricing in Honolulu, Hawaii. If you're moving to Hawaii, now is a really good time to buy.”
Honolulu ranked at the bottom of the list of 100 markets, followed by Virginia Beach, Baltimore, along with New York City and New Orleans. All are places that are considered to be a good buy right now.
100. Honolulu, HI
99. Virginia Beach, VA
98. Baltimore, MD
97. New York, NY
96. Baton Rouge, LA
95. Washington, D.C.
94. New Orleans, LA
93. Albany, NY
92. Little Rock, AR
91. Hartford, CT
So, is there a chance for a housing bust to occur, similar to what happened during the Great Recession 15 years ago? Johnson doesn’t think so.
“We are in a fundamentally different set of economic circumstances today than we were 15 years ago,” he said. “Are some markets prone to perhaps go down in price or face a downturn? Yes, but it doesn't seem to be as dramatic as what we saw a decade and a half ago. Many markets are pretty well braced for this.”
Yet, Johnson also said there’s more to buying a house than just the cost. There are emotional factors at play, too.
“You've bought a house that fits what you want is tailored to you,” he said. “So, it's much more than just a strict financial investment.”
Yet, it’s an investment still worth examining closely. For a detailed look at the studies findings, click here.
