Study: Metro Detroit leads US in overvalued homes
Researchers at two Florida universities conducted a study to determined the most and least overvalued housing markets in the U.S. – metro Detroit ranked at the very top.
(FOX 2) – Are homes in metro Detroit overvalued?
According to researchers from Florida Atlantic and Florida International universities, the answer is yes.
According to the universities’ study, the Detroit metropolitan area is currently the most overvalued market in the entire country.
And if you’ve been on the lookout for houses in metro Detroit recently, you already know supply cannot keep up with demand; it has been that way for a few years now.
“A lot of metro areas will rise 4 to 5 to 8% per year. Michigan, Detroit specifically, property values have gone up over 40% year over year,” said real estate agent Michael Perna.
Hop on Zillow, and you may be surprised by the prices of houses around you.
Those same numbers were used by researchers at the two Florida universities who conducted the study, which determined the most and least overvalued housing markets in the United States – metro Detroit ranked at the very top.
However, not everyone is buying what the study is selling.
“If we were having an overpriced real estate market, we wouldn’t be seeing multiple offers,” said Dylan Tent, a real estate salesperson with Signature Sotheby’s International Realty in Birmingham.
Often times, sellers can get misled by the prices they see on the hypothetical sales sites, and there is danger to setting prices too high.
“That is just an educated guess based on a computer,” Trent said. “You will typically earn money on your sale by pricing it at the market or slightly below, and creating some urgency and additional interest into it.”
So, who is most likely to know if the price is set correctly or if it’s overvalued?
“It’s the buyer that’s gone through the most similar homes. And they are comparing you to everything that’s been for sale,” Tent said. “So when you see something, you’ll immediately know if it’s high or low just based on how it makes you feel when you walk in the door.”
The realtors FOX 2 spoke with are not putting too much stock in the term “overvalued.”
“If you buy now, you are going to be more rewarded in appreciation than if you wait until the rates go down,” Tent said.
“Buy now because home values are going to continue to rise at an unprecedented rate for the foreseeable future – the next three of four years at the minimum,” Perna said.
On the flip side, the study out of Florida found that Honolulu and New Orleans were the most undervalued markets in the country.
