More than 50 percent of American housing markets were considered overvalued in April, according to a new monthly report from data firm CoreLogic. Home prices were up 6.9 percent year-over-year.
Markets are defined as overvalued when home prices are 10 percent higher than the long-term, sustainable level in the local market, per CNBC. Even though San Francisco is one of the most expensive markets in the nation, with prices up more than 12 percent YOY, it is considered "at value," because local incomes can support these prices. Markets that are overvalued include Denver, Houston, Las Vegas, Los Angeles, Miami, New York, and Washington D.C.
"The best antidote for rising home prices is additional supply," said Frank Nothaft, chief economist for CoreLogic. "New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures." Some argue that the improving economy will support higher home values. So far that appears to be the case. Overall home sales have been weakening, but most blame that on lack of listings more than weakened affordability, although higher prices have to be sidelining some buyers.
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