A report from Fitch Ratings suggest that Texas won’t be able to sustain the record home prices that it reached in 2016. HousingWire staffer Ben Lane takes a look at this report which shows that Texas is one of the states where prices are rising too quickly and therefore exceed supporting economic fundamentals.
The Fitch report shows that nationwide home prices increased by 1% in 3Q 2016 and had a total increase of 3% through October 2016. While this is sustainable, Dallas saw far greater increases:
As Fitch’s report, the Dallas metro area saw prices increase by 13.4% over the last year. And based on Fitch’s calculation, that means that prices in Dallas are between 10% and 14% higher than the market can sustain.
And it’s not just Dallas that’s overheating. According to Fitch, the whole state is overpriced by that same margin, between 10% and 14%.
Joining Dallas in the overpriced by double-digits category are Las Vegas, Phoenix, and Portland.
According to Fitch’s report, some other major markets are overpriced by between 5% and 9% compared to what each market can sustain, including Atlanta, Los Angeles, Miami, San Francisco, and Tampa, Florida.
On a statewide level, home prices in Idaho are the most overvalued in the nation. According to Fitch, home prices in Idaho are overvalued by between 15% and 19%.
Beyond Texas, there are several other states where home prices are overvalued by between 10% and 14%, including Arizona, North Dakota, Nevada, and Oregon.
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