The Twin Cities’ housing market is one of the least “overvalued” major metropolitan areas in the country, according to a recent analysis.
- This ranks 76th out of the 100 largest metropolitan areas in the United States
Zoom out: 15 metropolitan areas have real estate markets overvalued by more than 50%. The top three include Boise, Idaho; Austin, TX; and Ogden, Utah.
How it works: The researchers ranked the most overvalued housing markets in America’s 100 largest metropolises by determining the premiums buyers pay. The higher the premium, the more overvalued a market. The researchers’ data goes back to 1996 and covers single-family homes, townhouses, condominiums and co-ops.
The plot: Rising interest rates have increased home inventory on the market and slowed sales, but have yet to reduce the median sale price in the Twin Cities – it hit a record high of $375,000 in May , according to the Minneapolis Area Association of Realtors.
- “Recent buyers in many of these cities may have to endure stagnant or declining home values while the market stabilizes – and that’s not what they want to hear if they had planned to resell anytime soon,” said Ken H. Johnsoneconomist at the FAU College of Business.
What they say : Recent homebuyers may not feel the same pain locally because the Twin Cities hasn’t always been a booming housing market, said Libby Starling, director of the Department of Community Development and Engagement at the Federal Reserve Bank of Minneapolis.
Starling waiting for a few buyers at the lower end of the market – like those buying their first home – could be overpriced. But she doesn’t see a big price drop coming.
- “I expect the number (median sales) to flatten out, maybe even drop a bit. I see more stability than a significant drop in this value.”
- “(We don’t) run as much risk of a significant loss in home values,” she added.