Dallas-Fort Worth housing market is 48% overvalued

The metroplex’s homes ranked 18th-most overvalued in nation, academic study finds

Florida Atlantic University economist Ken Johnson and Florida International University’s Eli Beracha (LinkedIn, iStock)
Florida Atlantic University economist Ken Johnson and Florida International University’s Eli Beracha (LinkedIn, iStock)

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

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