Is Utah, Idaho housing market overpriced? These U.S. cities are ‘overvalued’

Three Utah cities continue to be among the top 10 “most overvalued” housing markets across the US: Ogden, Provo and Salt Lake City.

Another city in the West — Boise, Idaho — was the only city where housing premiums fell in March, but Boise remains the country’s most overvalued housing market by a huge margin, with premiums at over 75%. It dipped slightly from over 76% in February.

That’s according to the latest research released out of Florida Atlantic University and Florida International University.

Boise and the three Utah cities have remained high on the list of the top 100 US housing markets, all of which except Boise have rising prices that are “forcing buyers to pay higher premiums — the amount of money above what they should be spending based on past pricing trends,” according to a Florida Atlantic University release issued Tuesday.

“The larger the premium, the more overvalued a market is.”

ogdenWeber County’s largest city in the northern end of the Wasatch Front, ranked No. 3 in the nation, with an over 63% premium.

Provoin Utah County (home to Brigham Young University), ranked No. 8 in the nation, with an over 54% premium.

Salt Lake CityUtah’s capital, ranked right behind Provo in the No. 9 slot, with a 53.8% premium.

Here’s how the top 10 rankings fell:

  1. Boise, Idaho—75.18%
  2. Austin, Texas—66.29%
  3. Ogden, Utah—63.33%
  4. Las Vegas, Nevada — 59.55%
  5. Atlanta, Ga. — 55.96%
  6. Phoenix, Arizona—55.5%
  7. Spokane, Wash. — 54.72%
  8. Provo, Utah—54.32%
  9. Salt Lake City, Utah — 53.77%
  10. Charlotte, N.C. — 52.54%

See the full list of 100 top housing markets here.

The big pictures: Home prices in the “overwhelming majority” of the US’s largest housing markets continue to rise, according to Florida Atlantic University and Florida International University’s research.

The high premiums come despite the Federal Reserve’s recent move to raise mortgage rates in hopes of tempering runaway demand. So far, the rates haven’t stamped out demand enough to slow price increases — although national economists have pointed to early signs of a “cooling” market.

Today’s mortgage rate: The national average on a 30-year fixed mortgage hit 5.44% on Thursday, according to the latest Bankrate.com survey of the nation’s largest mortgage lenders.

Should I buy? “The remarkable demand for homes has put today’s buyers at a major disadvantage,” said Ken Johnson, an economist at Florida Atlantic University’s College of Business.

“Just to have an offer accepted, buyers have to outbid a host of other competitors, but that means they’re wildly overpaying in many areas. When the music stops, and it will, it could be a long time before recent buyers will be able to turn around and resell the home for an acceptable profit.”

When the market eventually tempers — who knows when — areas with low or no population growth could see a big price drop despite inventory shortages, Johnston said. Areas with both inventory shortages and population growth will be at far less risk, but that comes with affordability issues.

“Essentially, you have to pick your poison,” Johnson said. “Is it better for you to live in an area with better price declines so housing is more affordable again or in an area with modest or very small price declines that keep homes out of reach for many middle-class Americans?”

The Utah market: In high-demand areas like Utah, where a yearslong housing shortage has pushed inventory extremely low, local experts have said rising mortgage rates will likely only slow — not stop — housing price increases while pricing out even more potential homebuyers.

Here, as Utah continues to see extremely low inventory, local experts say it’s hard to fathom a housing “bubble” popping anytime soon.

At pricepeak? The latest research out of Florida comes after the same researchers speculated in December that Boise, Ogden and Provo may have hit an “inflection point” and were “poised to flatten.”

The researchers reported a pricing “crown” developing in those overvalued markets. “That’s an indication that home values ​​in those areas may be leveling off.”

However, clearly that peak still hasn’t come.

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