Global Insight, an economic forecasting firm, recently joined with National City Corp. to produce the latest in their ongoing series of “State of the Housing Market” reports which contained some interesting charts and graphics that, as the cliche goes, are worth a thousand words. Here’s a look at housing price appreciation in the first quarter, shown on an annualized basis. Green areas are still rising in value, yellow are static, and red areas show markets where prices are declining. Lotta red, isn’t it?
Global Insight also makes calculations as to the percentage of homes that are “affordable” and “unaffordable” (This would take 1,000 words to describe, so just go with me on this one). Perhaps surprising, the economists there calculate that the percentage of homes that are “overvalued” has come down sharply, to 25% in dollar terms and 14% in unit terms. Hmmm. Do you buy that? Here’s the chart showing the trend line…
Global Insight also produced a nifty national chart showing which regions are overvalued, which are undervalued, and by how much…
Areas shown in grey are 14% to 24% undervalued, green areas are 14% undervalued to 14% overvalued, yellow areas are 14% to 34% overvalued, and red areas are 34% to 79% overvalued.
Interesting that there's nothing west of New Mexico that's considered undervalued. And nothing in the Southeast, outside of Florida, that's overvalued. I have to think that's going to be a factor in economic development. Companies are not going to want to locate or expand in areas where their employees can't afford houses.
The study also includes a market-by-market calculation as to how much each market is overvalued or undervalued. I'll update this posting with some statistics when I have more time, so check back. My current hometown, Atlanta, is undervalued by 4.5%, and our favorite market--Washington, D.C.--is 38% overvalued.
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.