Naples, Fla., Still the Most Overvalued; Dallas and College Station-Bryan, Tex., Are the Most Undervalued

Posted by: Peter Coy on March 19, 2007

Now that you’ve read the headline you don’t need to read the item—that about sums it up. But in case you want some details: Global Insight Inc., the Waltham (Mass.) economic forecaster, and National City Corp. of Cleveland came out today with their quarterly analysis of which of the nation’s top 317 housing markets are overvalued and undervalued.

Overall, there was a tiny decline in the amount of overvaluation, to 16% of the nation’s housing units from 17%, thanks to easing prices. But prices are still growing strongly in some other areas, like northern Arizona, Utah, Idaho, Washington, and Oregon.

Here’s a blurb from the press release.

“[T]he greatest incidence of overvaluation continues to exist in pockets along the Atlantic and Pacific Coasts. New England, however, no longer appears to be significantly overvalued, while Orange County, CA; Tucson, AZ; Reno and Carson City, NV; and Kingston, NY also fell below the threshold denoting extreme overvaluation. Meanwhile, parts of Texas continued to experience above-average price increases in the latest quarter, but also continued to have the highest concentration of under-valued markets in the nation.
“Naples, FL remains the most over-valued market in the country, although its level of overvaluation declined during this period to 79.9 percent, down from 83.6 percent (revised) in the third quarter. Meanwhile, Dallas and College Station-Bryan, TX remained virtually tied for the most undervalued markets, 21.6 and 22.5 percent, respectively, although home prices rose slightly in both markets.”

Click here for more.

Reader Comments

Stephen Rowe

October 3, 2007 4:13 PM

It would be nice to see how they determine what constitutes overvaluation. Naples, Florida for instance is populated with probably 50% retired people which means if you use earned income, they will always be overvalued. On the other hand if you take this into account and use total income from all sources, including investment and retirement accounts, I think you would find that it waould be undervalued.

I have lived in almost every part of the United States and have seen that you not only are different regions different, but areas within regions have different economic forces in play. To give you an easy example, Washington, D.C., economically has very little to do with either Baltimore, Richmond, or even Fairfax, Va.

Instead of just reporting what some person or organization states it would be nice to see Business Week, and all media for that matter, actually do a little bit of analysis themselves and actually look at the markets and determine if the statements are based on facts and reflect the actual markets. It is the media's responsibility not to just report what others say, but also to look behind the comments and evaluate them.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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