A decade after the Great Recession sent home values plummeting across the country, a new report shows that a significant number of metro areas around the nation — including Houston — are considered overvalued.
The stock of affordable homes has dwindled, making homebuying a challenge for both first-time buyers and those with moderate incomes, the report from the global real estate data provider CoreLogic Inc. found.
“At this point, we estimate that more than one-third of the 100 largest metropolitan areas are overvalued,” said Frank Martell, president and CEO of CoreLogic, in a statement.
CoreLogic defines an overvalued market as one in which home prices are at least 10 percent higher than the long-term, sustainable level.
Other overvalued Texas cities include Austin, Dallas, Waco, San Antonio, Fort Worth, Laredo, Longview, Midland, Odessa, Tyler, Abilene, Corpus Christi and College Station, said Molly Boesel, principal economist for CoreLogic. El Paso is considered undervalued while Lubbock, Amarillo, Brownsville and Wichita Falls are considered normal.
Other signs point to Houston’s lack of affordable housing. For example, a 2017 Metrostudy report showed home starts for homes priced below $200,000 decreased by 5.2 percent, while home starts for the $300,000-400,000 range went up 11. 1 percent. Lawrence Dean, regional director for Metrostudy, said the lower price point will continue to see decreases moving forward because of the difficulty in building homes at that price point.
A breakdown of new home starts by price point.
An overvalued market is defined as one in which home prices are at least 10 percent higher than the long-term, sustainable level.