Four US cities with some of the largest housing markets are now considered overvalued, showing signs of a housing bubble and presenting a challenge for affordability in the coming years, says CoreLogic. Home prices rose nationally by 6.7 percent in June, and with the increase, home prices in Denver, Houston, Miami and Metro Washington D.C. are now considered overvalued and overreach sustainable levels.
The increases are caused by a weak supply of affordable homes for sale. “As of Q2, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years,” Frank Nothaft, chief economist at CoreLogic, said.
President and CEO of CoreLogic, Frank Martell, said, “With no end to the escalation in sight, affordability is rapidly deteriorating nationally. 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.”
However, previous overvalued markets including San Francisco and New York City are considered at value.