WFH, Other Factors Contribute to Top 10 Most Overvalued Home Markets

Those who want to move to Boise, Idaho, to get away from it all or to “work from anywhere” better prepare to break the bank. According to a new analysis by professors at Florida Atlantic University and Florida International University, it is the most overvalued housing market in the country.

Three other primary markets that were hit hardest during the U.S. housing collapse more than a decade ago – also rank among the 10 most overvalued: Phoenix, Las Vegas and Stockton, Calif.

Based on past pricing history, homes in Phoenix are selling for a 42.31 percent premium. Homes in Las Vegas are selling for 41.88 percent above their long-term pricing trend, just ahead of Stockton’s 38.50 percent. 

Then there’s Boise, where homes are selling for 80.64 percent more than they should, based on a history of past pricing. Work-from-home consumers priced out of other markets during the pandemic appear to be leaving those expensive cities and driving up values in Boise, according to Johnson and Eli Beracha, Ph.D., of FIU’s Hollo School of Real Estate.

Consumers buying now in the most overvalued markets are paying near peak prices and risk being stuck for a significant amount of time before they can realize solid returns on their real estate investments, said Ken H. Johnson, Ph.D., a real estate economist and associate dean in FAU’s College of Business.

“In the Top 10 markets, potential buyers might want to consider renting and reinvesting money that they otherwise would have put into homeownership,” Johnson said. “Renting and reinvesting has been shown to often outperform ownership in terms of wealth creation.”

Meanwhile, Baltimore and Virginia Beach, Virginia, are among the 10 markets offering the best deals to buyers, the analysis shows.

In Virginia Beach, homes are selling for a 2.46 discount. Baltimore homes are selling for a 1.69 percent discount. Leading the list of most undervalued areas is Honolulu, Hawaii, where homes are selling for 4.93 percent less than they should.

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