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 September 12, 2007

Fewer Number of Homes Considered Overvalued
The real estate forecasting firm Global Insight reports that the nation's housing market continues to show a decline in home price overvaluation. Home prices are up just 2.6% year over year, showing the weakest gain since 1995.
The analysis of 330 metropolitan areas showed that 80 areas experienced price declines since the first quarter of this year. When measured on a year-over-year basis, 93 metropolitan areas had lower prices in the second quarter of this year. More than half of these areas were in Michigan, Florida, and California.

The largest pricing corrections were seen in California metropolitan areas, led by Santa Barbara, which was down 12.6%. Within the first six months of 2007, the city of Merced, California; this experienced the sharpest decline of -6.4%. Much of Florida showed declines as well. Punta Gorda, -6.2%, Vero Beach, -5.9%, Port St. Luci, -5.4%, and Sarasota, -5.2%.

Property overvaluation remains mainly a coastal phenomenon. Every state on the West Coast, in addition to inland states of Nevada, Utah, New Mexico, and Arizona; Washington, D.C. and Florida to the Boston corridor on the East Coast.

To date, the most overvalued markets in the country are Madera, CA, 70.9%, and Merced, CA, 69.4%. The most undervalued markets continue to be Dallas, 25% and Houston, 24.4%.

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