CNNMoney has published a list ranking 100 housing markets according to affordability. Though home prices are beginning to level out in parts of the country, they’re still way too high in other areas.
The median home, however, is still overpriced by an average of more than 14 percent, … and homes in many markets are still way too high. This matters because those markets have much more potential for the kind of steep decline that could be disastrous for homeowners — and the local economy.
The most affordable place to buy a house? El Paso, Texas, where homes are 26% undervalued. The least affordable? Santa Barbara, where homes are 86% overvalued. 86%!!!
See the article for the complete list of U.S. home markets and for more on the survey’s methodology.
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I live in the Tampa/St. Petersburg area, an area which is rated as 33% overvalued. However, this is beginning to change. In the past few years, there has been a rush to convert local apartment complexes to condos. This has led to a sort of artificial housing shortage due to the number of apartments that were off the market during conversion. However, so many condo conversions have been done that the developers who started the projects are having a hard time selling the completed units; and some are even resorting to renting the units rather than attempting to sell them. This is beginning to drive down the cost of condos, which is in turn driving down the cost of housing overall. This is already being seen – houses are staying on the market much longer than they were a year ago, or even six months ago.
So while I wait for the housing market to return to something resembling equilibrium, I’m living in an apartment and paying off my debts so that I can starting getting rich (slowly).
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The over/under valued thing in itself is spurious. “Over/under valued compared to what?” is the best question. You don’t just pay for the building materials, that’s pretty universal. You are paying for the land the damn thing sits on. You get a discount in El Paso because land is plentiful and no one wants to live there. You pay a premium in CA for desirability and scarcity. Concrete and stucco costs roughly the same everywhere. There is no such thing as overpriced land. It’s relative to demand.
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I am surprised that GRS is stil (in May of ’08) providing links to housing market stories that are almost two years old! Too much has happened since then.
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This doesn’t surprise me at all. My home state, California is on the list 12 times & every single one is listed as overpriced.
One of the reasons I moved out of state.
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