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CoreLogic: Home Prices in Denver, Houston, Miami, DC Are 'Overvalued'

CoreLogic: Home Prices in Denver, Houston, Miami, DC Are 'Overvalued'
(Dollar Photo Club)

By    |   Tuesday, 01 August 2017 03:44 PM

Home prices in four of the nation's largest cities reportedly are now considered overvalued.

Home prices in Denver, Houston, Miami and the Washington, D.C., metropolitan area now exceed sustainable levels, according to CoreLogic.

To determine if a market is overvalued, CoreLogic compares current prices to their long-run, sustainable levels, which are supported by local economic fundamentals like disposable income, CNBC explained.

An “overvalued” market is one in which home prices are at least 10 percent higher than that level, CNBC said.

Home prices rose 6.7 percent nationally in June compared with June 2016. Prices are up nearly 50 percent from the trough of the housing crash in March 2011, CNBC explained.

Some previously hot markets, such as San Francisco and the New York City metropolitan area, are cooling down.

“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011. With no end to the escalation in sight, affordability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington,” said Frank Martell, president and CEO of CoreLogic.

“While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge,” he said.

To be sure, U.S. home prices reached a new high in May for the sixth straight month, raising fears of another housing bubble roughly a decade after a previous one burst, the Associated Press reported.

The Standard & Poor's CoreLogic national home price index gained 5.6 percent in May. That’s 3.2 percent higher than the July 2006 peak before the subprime bubble collapsed, triggering the worst economic collapse since the Great Depression.

Some analysts downplay the notion of a new bubble, and the unrelenting price increases may already be cooling sales. Other aspects of the last decade's housing boom and bust, such as rapid sales increases and surging home building, aren't happening now.

"Sooner or later something will have to give," Svenja Gudell, chief economist at Zillow, told the AP. "Demand will fade, builders will begin delivering more new homes and/or more sellers will start coming out of the woodwork. But for the time being, expect this strong sellers' market to continue."

(Newsmax wires services contributed to this report).

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Home prices in four of the nation's largest cities reportedly are now considered overvalued.
corelogic, home, prices, over, value, housing
Tuesday, 01 August 2017 03:44 PM
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