Homes are overvalued in most of the US – and the problem is worse in these 5 states
ResiClub co-founder and editor-in-chief Lance Lambert discusses the U.S. housing affordability crisis on 'Making Money.'
An overwhelming majority of homes in the U.S. are overvalued as steep mortgage rates and an ongoing housing shortage push the price of real estate even higher.
A new report published by Fitch Ratings found that homes were overvalued by 11.1% at the end of 2023, a trend occurring in about 90% of U.S. metro areas.
But the increase in homes being sold at prices over the long-term average was noticeably higher in a handful of Southern states.
Tennessee, Arkansas and South Carolina saw the sharpest rise in overvalued homes, followed by Montana and Alabama.
CREDIT CARD DELINQUENCIES ARE SURGING
There are a number of driving forces behind the spike in prices.
Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.
Available home supply remains down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, according to a separate report published by Realtor.com.
Higher mortgage rates over the past three years have also created a «golden handcuff» effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.
WHY CAN'T YOU FIND A HOME FOR SALE?
Homes in the Issaquah Highlands area of Issaquah, Washington, on April 16, 2024. (Photographer: David Ryder/Bloomberg via Getty Images / Getty Images)
While an uptick in the number of home listings in certain markets is a welcome sign that suggests «early
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