“While population growth is relatively stagnant in the area, people are starting to leave their current households to form new ones, placing pressure on a housing market that simply does not have enough units to support this new demand,” Johnson said.
The research, which examines the 100 most populated metro areas in the US, uses publicly available data from Zillow to calculate how overvalued or undervalued typical homes are in each market.
Currently, 98 of the 100 cities studied are selling at a premium, with only Honolulu and New Orleans transacting at a discount.
Johnson noted that continued rent growth in Detroit signals that home prices are likely to keep rising in the near future. However, he cautioned that Detroit lacks the sustained demand from newcomers and population growth seen in markets like South Florida and other parts of the Sun Belt.
“Eventually, prices will return to their long-term trends, but how they get there is the open question – will prices crash as they did after the last housing cycle’s peak or will home prices flatten out and slowly work their way back to the area’s trend. It will be one of the two,” Jackson said.
Source: mpamag.com