We all know it’s expensive to live in or near the nation’s capital, but are metro DC home prices too high? According to the CoreLogic Home Price Index (HPI) for June, the answer is “Yes.” The D.C. region is one of four of the ten largest metro areas in the country where homes are now deemed to be “overvalued.”
The other three metro areas identified as “overvalued” by the CoreLogic HPI, based on June 2017 data, are Denver, Houston and Miami.
What Does “Overvalued” Mean?
CoreLogic compares home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable incomes in the area. Then it categorizes a market as at value, undervalued or overvalued. Homeowners’ incomes are one of the key fundamentals that are analyzed because there is an established relationship between income levels and home prices.
An overvalued market is one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued market where home prices are at least 10% below the sustainable level.
Regarding D.C. area home prices, CoreLogic chief economist Frank Nothaft told WTOP that “prices have risen much more over the last few years than incomes for regular families.”
He also said,“There are still some parts of the overall D.C. metro area that still are fairly valued, but they tend to be way at the outer rim of the metropolitan area. It’s really hard to find affordable housing either in D.C. or close.”
Metro DC Home Prices High, But Prices Also Up Across the Nation
Home prices nationally increased 1.1% in June over May. However, they increased 6.7% between this June and June 2016, according to the CoreLogic HPI.
CoreLogic President and CEO Frank Martell said in the HPI report, “Home prices are marching ever higher – up almost 50% since the trough in March 2011. With no end to escalation in sight, afforability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington. While the low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until and when the industry resolves the housing supply challenge.”
Lakeside Title’s Montgomery County Office Is Here to Serve You
If you’re looking for a title service company, Lakeside Title Company is here to serve the diverse community. We offer title insurance and numerous title services to streamline residential and commercial transactions for realtors, buyers and sellers and lenders. To learn more about our comprehensive title-related services, give us a call at 410-992-1070. We look forward to the chance to serve you!