As the debate over the U.S. housing market's valuation intensifies, real estate experts are divided on whether home prices are too high. While some anticipate a downturn in prices, others argue that current high prices are justified due to strong demand and limited inventory.
A recent analysis by Florida Atlantic University and Florida International University researchers revealed that homes in 98 of the 100 largest housing markets are selling above their long-term prices, indicating overvaluation. While concerns about buying at the market's peak persist, many experts believe the housing market is unlikely to experience a crash similar to the Great Recession, Realtor.com reports.
“It’s certainly possible that home prices could fall from recent highs. It’s also possible they could still go up,” says [Danielle] Hale. “One year ago, everyone was predicting that the sky would fall in real estate—and that hasn’t happened in most markets.”
Unlike during the Great Recession, there are more buyers today than there are homes for sale. That shortage is expected to put a floor under prices, keeping them more elevated than many buyers would prefer.
“There is going to be some adjustment. It could be that prices fall, it could be that incomes grow to catch up, it could be that mortgage rates come back down,” says Hale. “Or each of these three things could contribute a little bit over time until we gradually get back to housing taking up a more normal share of income.”
Advertisement
Related Stories
New-Home Sales
Mortgage Rates Are Up but New-Home Sales Still Solid in March
Lack of existing home inventory drove a rise in new-home sales, despite higher interest rates in March
Labor + Trade Relations
Who's Earning What in Construction
Workers in construction management roles may earn a higher median wage, but on average, lower-paid occupations have experienced somewhat faster wage growth
Build to Rent
Build-to-Rent Is Booming, Particularly in These Metros
A recent report finds that the Phoenix metro leads with more than 4,000 build-to-rent units completed in 2023, and Texas is the leading state for build-to-rent development