FAU: Housing markets at or near peak prices

by | Aug 25, 2022

  • Home prices appear to have peaked, according to a new study on Thursday
  • Real estate experts believe the severity of the U.S. housing slowdown will vary across the nation
  • Florida continues to have some of the most overvalued markets

Home prices are beginning to peak across several U.S. markets, according to a July analysis by researchers at Florida Atlantic University and Florida International University.

In Thursday’s analysis, FAU’s Ken H. Johnson, Ph.D., and FIU’s Eli Beracha, Ph.D., ranked the 100 most overvalued housing markets by analyzing their premiums – the percentage above the long-term pricing trend that consumers must pay in order to buy a property. The larger the premium, the more overpriced the market.

According to the report, premiums declined from June in 27 markets, mostly west of the Mississippi River, and 22 of the 27 also experienced price declines. Areas like Austin, Denver, Minneapolis, Los Angeles, Phoenix, Salt Lake City, Utah, San Francisco and Seattle were among the metros with falling premiums and average prices:

In June, premiums declined in 12 markets and average prices fell in seven.

In the analysis, Johnson noted that a falling premium is a classic sign of a home price peak.

“The consistent increase in the number of premium downturns in our monthly reporting strongly suggests that individual housing markets are at, or will soon be experiencing, their pricing peaks,” Added Johnson. “We are at the turning point. The likelihood of significant price increases in the near future grows smaller by the day.”

Despite the price peak, data also showed that prices are still up in most of the markets. Beracha added that he doesn’t expect home values to fall sharply across the board, as they did during the last housing downturn of 2006-2011.

“There simply is not enough inventory to go around,” said Beracha. “That undersupply will keep pressure on prices in many areas.”

Additionally, Boise, Idaho, remains the nation’s most overvalued market, with buyers paying 66.73 percent above the long-term pricing trend. Austin, previously the second most overvalued market, has been surpassed by Las Vegas and Fort Myers. The Sunshine State also has two other metros, Lakeland and Tampa, in the top 10.

The full rankings can be found here.


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