Homes in 2 SC cities are overpriced by more than 30%, new study shows. Do you live in one?
Two South Carolina housing markets are overvalued by more than 30%, a recent study from a pair of Florida universities shows.
Of the biggest 100 U.S. metro housing markets considered overvalued, Columbia was ranked 47th at 30.92%, while Greenville was ranked 39th at 37.33%.
Researchers from Florida Atlantic University and Florida International University determined what markets were overvalued by analyzing the percentage difference between the expected price of a home and what buyers are actually paying. The expected prices was determined by a statistical model and the actual monthly prices paid came from the Zillow Home Value index.
Basically, if buyers paid more than expected, then that home was classified as overvalued.
The researchers then ranked the most overvalued housing markets of America’s 100 largest metros by determining the premiums buyers have been paying. The larger the premium, the more overpriced the market. The researchers’ data dates back to 1996 and covers single-family homes, townhomes, condominiums and co-ops.
However, Joey Von Nessen, research economist at Moore School of Business at the University of South Carolina, wrote in an email to The State that in his opinion, how the report determined what was overpriced was too simplistic and ignored many other factors, such as new sources of demand.
For example, South Carolina has experienced relatively higher population growth in recent years because of a higher influx of people from other states — a trend expected to continue for the next several decades.
“As more people move to South Carolina, the demand for housing rises,” Von Nessen wrote. “Housing prices in SC then rise above their historical long-run average. While these price increases lead to some South Carolina markets being classified as “overpriced” by the report’s metric, it is nevertheless a demand-driven increase, which likely reflects a more permanent market shift and not “overpricing” based on temporary factors.”
Florida Atlantic University economist Ken Johnson, noted in a press release announcing the report that rising interest rates could help fuel a slowdown after skyrocketing home prices the last couple of years.
“If we’re not at the peak of the current housing cycle, we’re awfully close,” Johnson said. “Recent buyers in many of these cities may have to endure stagnant or falling home values while the market settles — and that’s not what they want to hear if they had planned to resell anytime soon.”
Von Nessen also wrote that in 2022, rising interest rates had begun to moderately reduce housing demand in South Carolina and across the U.S., a trend likely to continue through the second half of the year. Still, South Carolina could see more demand and higher prices in the long-term, he added.
“Not all of the “overpricing” in the report reflects new, permanent increases in demand,” Von Nessen wrote. “However, South Carolina is expected to continue to see strong population gains for the foreseeable future compared to many other states. This suggests that many South Carolina markets may continue to see house price increases that keep them above previous long-run averages.”
Here are the top five most overpriced housing markets compared to Columbia and Greenville, according to the report.
Boise City, ID
- Overpriced: 72.64%
- Average price as of April 30: $516,548
- Expected price: $299,202
- Rank #1
Austin, TX
- Overpriced: 67.70%
- Average price as of April 30: $594,441
- Expected price: $354,473
- Rank #2
Ogden, UT
- Overpriced: 64.73%
- Average price as of April 30: $535,818
- Expected price: $325,264
- Rank #3
Las Vegas, NV
- Overpriced: 61.48%
- Average price as of April 30: $437,478
- Expected price: $270,911
- Rank #4
Atlanta, GA
- Overpriced: 58.01%
- Average price as of April 30: $367,946
- Expected price: $232,866
- Rank #5
Columbia
- Overpriced: 30.92%
- Average price as of April 30: $226,844
- Expected price: $173,273
- Rank #47
Greenville
- Overpriced: 37.33%
- Avg. price: $291,400
- Expected price: $212,196
- Rank #39
This story was originally published June 13, 2022 at 5:00 AM with the headline "Homes in 2 SC cities are overpriced by more than 30%, new study shows. Do you live in one?."
