Is Your Housing Market Over- or Underpriced?

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A ratio dividing housing costs with the market’s average income over time can help you find out

September 14, 2015

A methodology developed by John Burns Real Estate Consulting can help you find out whether your housing market is over- or underpriced.

To find out where your market stands, a ratio of housing costs divided by income over time, called Intrinsic ratio, is used. “Knowing the intrinsic value helps executives put today’s home prices into perspective,” Burns states in a Business Insider article.

A high Intrinsic ratio means a market is overpriced, and a low one means the opposite. The U.S. market with the highest Intrinsic ratio is San Francisco, at 65 percent.

At the other end of the spectrum is Detroit, which has an Intrinsic ratio figure of 15 percent.

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