Real estate agents in a number of markets are finding out that their clients may be heading to the sidelines amid a steady rise in home prices that so far is showing no boundaries, and that is turning up the heat on some already overheated housing markets.
A CNBC report noted that home prices rose 7 percent nationally in September, compared with September 2016. This was a higher annual increase than was seen in August, according to CoreLogic, a real estate data firm.
The CNBC report also pointed out that 48 percent of the nation’s top 50 housing markets are now considered “overvalued,” up from 46 percent in August. A market is considered overvalued when home prices are at least 10 percent higher than the long-term, sustainable level. Among the nation’s top 100 markets, 36 percent were considered overvalued.
Frank Martell, president and CEO of CoreLogic, said it’s the economy.
“A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate. While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate.”
The markets considered overvalued include Las Vegas, Denver, Los Angeles, Miami and the New York-New Jersey metropolitan area.
On the opposite end, several pricy markets are considered at value. These include Boston, San Francisco and Chicago, are considered at-value, based on long-term price sustainability. San Francisco is one of the most expensive markets in the nation, but higher incomes can support it.
The data is having an impact on the public, with the number of respondents who said now is a good time to sell a home falling 8 percentage points compared with September. The share who said that now is a good time to buy a home fell 6 percentage points in the survey by Fannie Mae.
Fannie Mae Chief Economist, Doug Duncan said the decline is likely seasonal.
“The modest decrease in October’s Home Purchase Sentiment Index is … a shift we expect at this time of year moving out of the summer home-buying season.”
As a result, it is becoming increasingly important for real estate agents to keep their finer on the pulse of their markets and to be one step ahead of developing trends.
