New study ranks the most overheated U.S. housing markets.
The Dallas-Fort Worth area has landed on a list of the country’s most overvalued housing markets.
But D-FW’s hot market is nothing compared with what’s happening in Austin.
The Austin area ranks second in the nation for overvalued housing, with buyers paying a more than 50% premium price compared with past trends, according to a new analysis by professors at Florida Atlantic University and Florida International University.
The D-FW area ranked 19th for overheated housing in the study, with homes selling for a premium of 31.57%.
Boise, Idaho, scored as the most out-of-whack market, with homes there selling for 80.64% over historic trends.
Metro areas in Utah, Arizona and Washington state also rated among the most overvalued.
“In the Top 10 markets, potential buyers might want to consider renting and reinvesting money that they otherwise would have put into homeownership,” Florida Atlantic University’s Ken Johnson said in the report. “Renting and reinvesting has been shown to often outperform ownership in terms of wealth creation.”
North Texas home prices are currently at an all-time high median of about $350,000. And preowned single-family home costs have soared by more than 50% in the last five years, according to data from local real estate agents.
Looking at other major Texas metro areas, home costs are now at a premium of almost 21% in San Antonio and about 18% more than they should be in the Houston area, according to the new study.
The spike in housing costs in the last two years in D-FW and other markets has been fueled by a severe shortage of available properties.
And several recent studies have warned that North Texas housing values are going up too quickly compared with overall incomes.
That’s one of the reasons home sales here in July and June were down from a year ago, some analysts tracking the local housing market say. They warn that many renters may decide to back out of the home buying market because of sticker shock.
The Dallas area ranked as one of the U.S. markets with the greatest shortage of homes, according to a new study by DeedClaim LLC, an online real estate document firm.
The Dallas area is short about 4,000 homes — behind only Phoenix among cities with the greatest housing deficits this summer.
7 tips for homebuyers in hot markets
NerdWallet has some suggestions for would-be homebuyers:
1. Spend time looking at what’s available before you get serious. The idea is to get a sense of how hot the local market is without the pressure of feeling like you need to make an offer.
2. Find a good real estate agent. You want someone who will alert you to listings as soon as they hit the market, if not before. And a good agent will know how to make your offer stand out.
3. Expect to compromise. Holding out for “the one” may not be an option in a hot market. Flexible expectations can give you more options.
4. Have your financing lined up. Compare mortgage interest rates from several lenders and get a mortgage preapproval from two or three lenders. Official Loan Estimates will help you compare interest rates and costs to find the best deal for you. In any hot market, a preapproval shows sellers that you’re serious.
5. Offer a can’t-miss closing. Especially if you’re competing with cash offers, you’ll want to show sellers that you can definitely close the deal. A preapproval gives you a leg up because it demonstrates that lenders find you creditworthy. Making a larger down payment can also be enticing to sellers.
6. Keep home inspection simple. In a hot market, it may be tempting to waive the home inspection. But if the home inspection turns up a worst-case scenario (like dry rot or structural damage), you want to be able to back out of the deal.
7. Be patient. In 2020, homebuyers typically searched for eight weeks and looked at nine homes, according to the National Association of Realtors. Already, 2021 seems to be an even tougher year for buyers. According to survey data from the National Association of Home Builders, 64% of active homebuyers in the first quarter of 2021 had been searching for more than three months — and 45% of those buyers say being outbid has kept them from buying a home.
Information provided by the Dallas News