May 22, 2018

Study: Home Prices Undervalued by 3%

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Study: Home Prices Undervalued by 3%

The housing market is still far from bubble territory, according to a new report that finds home prices are still undervalued by 3 percent nationally.

Find out why "there is no need to fear a bubble for at least a few years to come, if at all."

For the second quarter, Trulia’s Bubble Watch factors in home price values by comparing prices today with historical prices, incomes, and rents. In the first quarter of 2014, home prices were about 5 percent undervalued, and they were 8 percent undervalued about a year ago.

At the current pace, home prices are expected to be in line with long-term fundamentals—neither over- nor undervalued—by the last quarter of 2014 or the first quarter of 2015, according to the study.

Three-fourths of the 100 largest metros analyzed are still considered undervalued. These areas were found to be the most undervalued:

  1. Akron, Ohio: 21% undervalued
  2. Cleveland, Ohio: 21%
  3. Detroit: 19%
  4. Dayton, Ohio: 16%
  5. Worcester, Mass.: 15%
  6. Memphis, Tenn.-Miss.-Ark.: 14%
  7. Toledo, Ohio: 14%
  8. Chicago: 14%
  9. Lakeland-Winter Haven, Fla.: 14%
  10. Providence, R.I.-Mass.: 14%

Source: “Bubble Watch: Home Prices Still Undervalued, But Not for Much Longer,” Forbes.com (June 27, 2014)