A recent study was conducted by real estate website Trulia to analyze home prices in one hundred metro areas relative to fundamentals such as jobs, income growth and household formation and rents, according to an article completed by Market Watch. Over the one hundred largest metro areas in the nation, housing prices varied dramatically. In general, though, the study found that the housing market is slowly edging its way back from the price crash that followed the peak of the housing bubble, which occurred in the first quarter of 2006. At that time, prices on homes in the United States were generally overvalued by approximately thirty four percent.
Despite the fact that things seem to be edging their way back to normality, there is still great variation in prices across the country. Of the top one hundred metro areas in the country, there were several that were highly overvalued. Housing prices in Austin, Texas were found to be overvalued by nineteen percent; this figure earned the city the title of most overvalued market in the United States. Specifically, the median prices of homes in Austin jumped eleven percent year-over-year in August, to come to a resting price of two hundred and forty seven thousand five hundred dollars. The average price of homes in Austin also increased, growing nine percent to three hundred and eleven thousand four hundred and fourteen dollars. Quickly following Austin were Los Angeles and Orange County, which both fell to fifteen percent. San Francisco’s homes were found to be overvalued by twelve percent; Riverside-San Bernardino was just behind San Francisco, overvalued at eleven percent. In general, seven of the top one hundred metro areas in the nation were overvalued by more than ten percent.
Alternatively, undervalued markets tended to fall in either the Midwest or New England like Farifield County, Connecticut. Dayton, Ohio was undervalued by twenty one percent. Shortly following this was Cleveland, which fell to be undervalued by nineteen percent. Finally, Detroit was undervalued at eighteen percent.