Housing market: What’s the least overpriced city? It’s not in Utah or Idaho
We already know Boise, Idaho, leads the country in what researchers have deemed the most “overvalued” housing markets in the West — trailed closely by the three Utah cities Ogden, Provo and Salt Lake City.
So what’s the least overpriced city?
Look to the East Coast, in Baltimore, Maryland.
That’s according to researchers from Florida Atlantic University, who have compiled rankings of the top 100 U.S. housing markets using open-source data from Zillow and other providers to score the most “overpriced or underpriced” metro cities in the nation.
The data, compiled by researchers Ken Johnson and Eli Beracha, “allows readers to quickly see the premium or discount that they are paying in their metro, on average, and further allows them to make more informed decisions about their real estate investments,” according to the study.
Really, Baltimore? Bet you wouldn’t guess the metro not far from Washington, D.C., and New York would be known for its housing prices — but keep in mind the key word here is “overvalued” or “overpriced” housing prices, not least expensive.
- Baltimore falls to the very bottom of the Florida Atlantic University rankings, with a 2.03% premium recorded in March. That’s slightly less overpriced than urban Honolulu or New York City, which are also ranked as some of the least overpriced cities with 2.11% and 2.83% premiums, respectively.
Why are these desirable housing markets seeing lower premiums compared to other metros across the country? It may have something to do with how hard these same areas were hit during the last housing downturn in 2008.
- “These and other hard-hit markets such as Miami seem to have learned and resulted in more aggressive price negotiations by locals. Sort of, fool me once, shame on you, fool me twice, shame on me,” Johnson said, MarketWatch reported.
Baltimore ranks the lowest with an average home price of $366,129 in March, compared to an expected price of $358,854, based on past price trends.
Compare that to Boise, which tops the rankings with an over 75% premium. The Idaho metro had an average home price of $515,926 in March, compared to an expected price of $294,512, according to the study.
Why are Boise and Utah so overpriced? The West continues to be among the hottest housing markets in the nation after the COVID-19 pandemic upended Americans’ lives, spurring many to reevaluate their situations and relocate to larger lots at lower price points.
Boise and rapidly growing areas like Utah — which was already struggling with a housing shortage even before the onset of the pandemic — have seen housing demand surge.
The question is, will that demand continue at current levels and keep driving prices up? Experts have said mortgage rates may help cool demand, but in high-demand areas they may only slow price increases, not stop them.
- “For several months, Boise has been the most overpriced housing market in the U.S., making it the market most exposed to a turn down. Thus, it’s reasonable to expect rising mortgage rates would first slow prices and premiums in Boise,” Johnson said, MarketWatch reported.
In Utah, demand continues to woefully outpace supply, experts say. They predict mortgage rates will only slow, not stop price increases while pricing out even more would-be homebuyers.