Three Utah cities are in the top 10 “most overvalued” housing markets in the United Staes, according to research that was recently released by Florida Atlantic University and Florida International University. Those cities are Ogden, Provo and Salt Lake City.
Boise is ranked No. 1 in the nation for its overpriced houses.
The Utah and Idaho cities rose up the ranks among cities in other states like Texas, Michigan, Washington, Arizona, Nevada and California with housing markets that researchers consider “most overpriced” in the United States, the study published in August said.
The researchers used open-source data from Zillow or other providers to score the top 100 overvalued or undervalued metro areas in the nation, ranking the cities by a percent premium that homebuyers are paying in today’s market based on a history of past pricing.
The top 10 overpriced markets with the percent premium over the average-priced markets are as follows: Boise, where homes are selling at an 80.6 percent premium; Austin, Texas, at a 50.7 percent premium; Ogden, at a 49.7 percent premium; Provo, at a 46.2 percent premium; Detroit, at a 45.6 percent premium; Spokane, Washington, at a 45.2 percent premium; Salt Lake City, at a 42.4 percent premium; Phoenix, at a 42.3 percent premium; Las Vegas, at a 41.9 percent premium; and Stockton, California, at a 38.5 percent premium.
The typical value of homes in Boise was over $523,300 as of the end of August, up more than 46 percent over the past year, according to Zillow. For Ogden, the typical home value is $341,300, for Provo it's over $448,300 and for Salt Lake City it’s over $565,000.
Buyers in the most overvalued markets are paying near-peak prices and risk getting stuck in their investment for some time before they can realize returns, said Ken Johnson, a real estate economist and associate dean at Florida Atlantic University’s College of Business and one of the researchers who conducted the study.
“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.”