Insider Monkey

20 Most Overpriced Housing Markets in the U.S.

Ramish Cheema
8 min read

In This Article:

In this piece, we will take a look at the 20 most overpriced housing markets in the U.S. For more markets, head on over to 5 Most Overpriced Housing Markets in the U.S.

The housing market has undergone significant turmoil over the past couple of years. The market was shaken up due to the coronavirus pandemic which led to a sudden increase in prices that caught many off guard.

However, despite the recent disruption, over the long term, home buying has been moving upwards. Data from the National Realtors Group shows that home ownership rates in America have consistently grown since 2015. Back then, home ownership rate stood at 63.1% and it steadily grew until 2019 when it stood at 64.2%. However, between 2019 and 2020, the rate jumped higher than it had in all the previous years and ended up sitting at 65.4% as of 2020 end. The latest rate is for 2021 when the ownership stood at 65.5%. Yet, the data takes a widely divergent turn when we analyze it by race, as it shows that while the rate for White Americans owning a home stood at 72.7%, for Black Americans it drops to 44%. Asians, on the other hand, have a higher rate which sits at 62.8%. In fact, for Black Americans, the home ownership rate has nearly remained static since 2011, since it was recorded at 43.6% a little over a decade ago.

Delving into the details state-wise, home ownership rate was the highest for White Americans in Delaware, Mississippi, and South Carolina. On the other hand, states and regions with the highest cost of living, namely Hawaii, Washington D.C., and California, had the lowest rates. For Black Americans, the highest rates were in the same states, however, the lowest rates were in North and South Dakota. Interestingly, though, and in a development that is common across all races, after married couples, single women are buying homes in far larger amounts than single men.

Further building on this, data from the Federal Reserve shows that the average price of a home in America was $516,500 as of the first quarter of 2023 while the median price was much lower and stood at $375,500. Comparing this data from values for December 2022, the average price was $535,800 while the median price was $366,900 - indicating that the incoming economic slowdown and rising interest rates have already started to make their mark on the industry.

Research from Harvard University's Joint Center for Housing Studies shows that most of the homes sold in America in 2022 were single family homes. Its hundred-page report shares the heavy impact of interest rate hikes on the housing market. According to the details, a 7% down payment on a typical home would require the buyer to fork out $27,500. The report adds that this large sump prices out 92% of renters from the chance to buy a home since their median savings stand at $1,500. Additionally, the rising interest rates have also (naturally) impacted the mortgage payments that home buyers will have to make. At a 3.5% down payment, Harvard estimates that the monthly payments sit at $2,020 - and at the same time, the minimum income needed to afford these payments sits at a stunning $107,600. Compare this with the median income in the U.S. of $69,717 in 2021 and you'll understand some of the current market dynamics

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