Report Finds Overvaluation in National Home Prices – NMP Skip to main content

Report Finds Overvaluation in National Home Prices

Phil Hall
Mar 13, 2015

A new report by Bank of America Merrill Lynch has determined that home prices nationwide are overvalued, with Houston-area properties leading the list at a 77 percent of overvaluation.

The report, which has not been made public yet and was obtained by the online site Newsmax Finance, found housing to be overvalued when compared to personal income growth, which is traditionally a primary driver for the rise or fall of property values. The report predicts a four percent rise in home prices this year.

“We find that national home prices are marginally overvalued,” said Michelle Meyer, an economist at Bank of America Merrill Lynch. “National home prices have increased 24 percent since the trough and the most recent data for December suggest 2014 ended with prices up 4.6 percent … The improvement was driven by those markets with the steepest drop, such as Las Vegas, Phoenix and Los Angeles. The gain in home price appreciation has since slowed in these regions as the markets move further away from the crisis period and are less influenced by distressed activity. This means that we should once again focus on the fundamental drivers of home prices: income growth and overall affordability.”

In a listing of major markets where home prices were compared to income growth, Houston came out as the most overvalued market.

“Although the regional economy has been reasonably healthy, price appreciation has outpaced that of local area income,” Meyer said. “The plunge in oil prices leaves the housing market in Houston vulnerable.”

The other most overvalued housing markets, according to the report, were Miami (43 percent); Washington, D.C. (27 percent); Portland (25 percent); Tampa (23 percent); Phoenix (20 percent); Dallas (20 percent); Denver (18 percent); Minneapolis (17 percent); and Los Angeles (16 percent).

Published
Mar 13, 2015
Manufactured Housing: The New Affordable Alternative

While the housing market is grappling with widespread affordability and supply, manufactured homes are gaining ground as a new alternative. 

Industry News
Dec 03, 2021
Angel Oak Home Loans Opens 3 New Branches

Continues expansion in Western U.S. with new branches in California, Nevada & Utah.

Industry News
Dec 02, 2021
Open Mortgage Names New President

Joe Stephenson, formerly of American Advisors Group, to lead daily operations.

Industry News
Dec 01, 2021
Homepoint Expands Refinance Program Offerings

Now offers Freddie Mac’s new refinance option, Refi Possible, making it easier for many homeowners with a Freddie Mac-owned mortgage to reduce their interest rate.

Industry News
Nov 30, 2021
Non-QM Lender Deephaven Hires Business Development VP

Dallas-based Tim Fisher charged with growing Deephaven’s correspondent business In Texas and surrounding states

Industry News
Nov 30, 2021
Biden Reappoints Powell As Federal Reserve Chairman

A signal that The Fed will continue its policies as inflation surges and economic uncertainty spikes due to an emerging variant of the coronavirus. 

Industry News
Nov 29, 2021