Dallas-Fort Worth homes now rank as the 18th-most overvalued in the nation.
A study by Florida Atlantic and Florida International universities compared Zillow’s estimated typical value of $381,089 for local single-family homes, townhomes, condominiums and co-ops to historical data going back to 1997, the Dallas Morning News reported. The researchers found that homes sell for 48.4 percent more than the price of $256,878 that would be expected under long-term trends.
“If we’re not at the peak of the current housing cycle, we’re awfully close,” said Florida Atlantic University economist Ken Johnson in a statement.
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Prior to the pandemic, local homes were only overpriced by 8.89 percent at a typical value of $260,311, according to the study. Boise, Idaho, leads the universities’ list of the most overvalued markets nationwide, with the typical buyer there paying $516,548, 72.64 percent more than the area’s long-term pricing trend, and Austin follows right behind at a 67.7 percent premium for a typical home value of $594,441.
“Recent buyers in many of these cities may have to endure stagnant or falling home values while the market settles — and that’s not what they want to hear if they had planned to resell anytime soon,” Johnson said.
He says a looming slowdown influenced by rising mortgage rates could help some people who’ve been priced out of the market buy a home, but could spell bad news for some homeowners. Researchers expect different outcomes across the country and anticipate growing population centers such as D-FW will see fewer price declines with prolonged affordability issues.
“In the prior downturn, many homes lost half of their values, but I don’t think we’ll see anything close to that this time around,” Florida International University’s Eli Beracha said in a statement. “Still, it could be painful for many consumers who are buying near the top of the market.
[Dallas Morning News] — James Bell