by Tom Joyce
The Phoenix housing market has become overpriced.
That’s according to a recent study from researchers at Florida Atlantic University and Florida International University.
The research found that homes in various metro areas are substantially overvalued with a low supply of houses on the market. It found that four U.S. housing markets are overvalued by more than 60%. Meanwhile, homes in another 11 markets are overvalued by 50% or more.
The research says that the Phoenix metro area ranks sixth nationally in terms of overvalued housing markets at 57.94%.
It says that at the end of April, the average home price in Phoenix was $466,170. This was much higher than the expected home price, which was under $300,000 ($295,164.60).
Home prices have increased rapidly in the Phoenix metro area. The average home price as of April 30, 2021, was $356,078. That means the average home price increased by more than $110,000 in a one-year span; it was a 30.9% increase in home values. Meanwhile, the expected home price only increased by about $10,000 in that stretch.
The economists who conducted the study don’t think this trend will continue.
“Near-record-low mortgage rates helped fuel demand for housing, especially during the pandemic, and the competition for homes pushed prices higher. But now the Federal Reserve is raising rates to curtail inflation, and already that’s cooling demand,” Ken H. Johnson, an economist in FAU’s College of Business, said in a press release.
“If we’re not at the peak of the current housing cycle, we’re awfully close,” he added. “Recent buyers in many of these cities may have to endure stagnant or falling home values while the market settles – and that’s not what they want to hear if they had planned to resell anytime soon.”
The top-10 metro areas included in this study ranked by how overvalued homes were: Boise City, Idaho (72.64%); Austin, Texas (67.70%); Ogden, Utah (64.73%); Las Vegas, Nevada (61.48%); Atlanta, Georgia (58.01%); Phoenix, Arizona (57.94%); Provo, Utah (57.02%); Fort Myers, Florida (56.26%); Spokane, Washington (56.25%); and Salt Lake City, Utah (55.75%).
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