The white-hot US real estate market is finally showing signs of cooling. The number of new residential building permits has fallen in recent monthsas inflation hit its highest level in 40 years and interest rates soared.
On June 15, the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point, the biggest increase since 1994, in an effort to stifle rising prices. The increase in rates means that lending services will further increase mortgage rates. With the rising cost of a mortgage, this could reduce the demand for homes. (Rising mortgage rates cost buyers at least $100,000 in every state.)
But after years of low interest rates and strong demand for housing during the coronavirus pandemic – as families took advantage of the closings to move – homes are extremely expensive in many popular markets.
According to researchers from Florida Atlantic University and Florida International University, 15 of the 100 largest metropolitan areas have housing markets so overvalued that the cost of a home is 50% or more than the expected price based on trends. local long-term prices.
To identify these 15 markets, 24/7 Wall St. reviewed the noted research, The Top 100 Housing Markets in the United States. The researchers used data from Zillow, specifically the Zillow Home Value Index, and a series of complex formulas that take into account home prices over a period of years to find the premium or discounts in home sale prices. compared to the expected prices for the 100 cities. Based on the research, we’ve ranked cities by their premium, as of April 30, 2022.
In Phoenix, Arizona, the average selling price of a home is about $171,000 above the expected price of $466,170. Less than a decade after Detroit filed for bankruptcy, the average sale price for a home in Motor City is $238,278, well above the expected average price of $157,631.
Of these extremely overvalued housing markets, three are in Florida and three in Utah. North Carolina has two: Raleigh and Charlotte. (This is the state with the most seizures.)
Here are the 15 cities with the most expensive housing markets