Overvalued real estate markets are appearing all over the United States — has your local area gotten overpriced? It can be hard to tell whether or not it’s overvalued at first without knowing any of the signs. Here’s a look at a few of the ways home buyers can tell they’re in an overvalued housing market and some parts of the country that have it the worst.
Ways to Identify Overvalued Real Estate Markets
One of the best ways to identify an overvalued real estate market is by looking at the comps. Comps, also known as comparables, are properties that have similar features and characteristics to the house you are appraising or looking at. By comparing properties with similar characteristics sold in the past year, you’ll have a much clearer picture of how the price of a particular home compares to others in the area — if a property is noticeably higher than its comps, then it’s likely to be overpriced. To get a better understanding of the comparables in your area, reach out to a local real estate agent who is familiar with prices in the region.
Another way that you can tell you’re in an overvalued real estate market is when the properties have been available for a long time. Given how housing is very in-demand, any homes that have been on the market for a significant period signify that they’re overpriced.
Which Housing Markets Are Overvalued the Most in the United States?
Want to determine if your local area has overvalued real estate markets? Then compare them to markets in other parts of the country that are overpriced. Seeing for yourself which housing markets are overvalued the most in the United States will help you better gauge whether or not your region is experiencing similar problems. So, which area has the most overpriced homes?
Boise, the capital city of Idaho, is considered to have one of, if not the most, overvalued real estate markets in the country — home buyers there are paying over $516,548 on average. A major reason why Boise, Idaho’s housing market has become so overvalued is that it became a Zoom town, which means there was a large increase in remote workers in a short duration of time. Other Zoom towns include Salt Lake City, Utah, Greeley, Colorado, and similar locations.
California has many overvalued housing markets as well. Numerous areas in the state, such as San Francisco, are experiencing overpriced properties because there isn’t enough housing to satisfy the demands of the population, which has bumped up the cost. A notable reason why this is happening in California specifically is because the unique geography of the state — a large portion of which is a desert — is not suitable for housing. As a result, many of the locations that are good for building residential properties have already been taken up.
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