Inman News

Within the last year alone, home price growth, which has reached 20.6%, has become 4 times greater than income growth, which is a mere 4.8%.

For weeks now, housing experts and economists have debated whether or not the country is in a housing bubble.

Home prices and mortgage rates have surged, while wages have trailed behind. Within the last year alone, home price growth, which has reached 20.6 percent, has become four times greater than income growth (which is a mere 4.8 percent). That means underlying economic forces in the market, such as incomes, are no longer able to support home prices in many places.

Mark Zandi, a Moody’s Analytics chief economist, told Fortune recently that a housing bubble would require both speculation-driven price growth and overvaluation — and overvaluation has now impacted over half of all U.S. housing markets, even though speculation-driven price growth isn’t at play in the U.S. (this time around).

It is reported that 67.9 percent of U.S. regional housing markets are now “overvalued,” as of the latest available data from March, meaning that incomes in those markets are no longer able to support home prices, according to an analysis provided to Fortune by real estate data firm CoreLogic.

For weeks now, housing experts and economists have debated whether or not the country is in a housing bubble.

Home prices and mortgage rates have surged, while wages have trailed behind. Within the last year alone, home price growth, which has reached 20.6 percent, has become four times greater than income growth (which is a mere 4.8 percent). That means underlying economic forces in the market, such as incomes, are no longer able to support home prices in many places.

Mark Zandi, a Moody’s Analytics chief economist, told Fortune recently that a housing bubble would require both speculation-driven price growth and overvaluation — and overvaluation has now impacted over half of all U.S. housing markets, even though speculation-driven price growth isn’t at play in the U.S. (this time around).

It is reported that 67.9 percent of U.S. regional housing markets are now “overvalued,” as of the latest available data from March, meaning that incomes in those markets are no longer able to support home prices, according to an analysis provided to Fortune by real estate data firm CoreLogic.

CoreLogic determined that just four overvalued markets out of 392 markets measured had a “very high” likelihood of facing a price drop: Bend, Oregon; Prescott, Arizona; Lake Havasu City, Arizona; and Bridgeport, Connecticut.

Twenty-two markets analyzed have a “high” chance of facing a price drop and 44 markets fell into the “medium” risk category.

However, other analysts think even more markets across the U.S. are overvalued right now — Moody’s Analytics, for instance, at the beginning of May said 96 percent of the country’s largest 392 markets are overvalued compared to incomes in those markets. The company added that 149 of those overvalued markets are at least 25 percent overvalued.

Zandi ultimately anticipates home price growth in the U.S. to tank from 20 percent to 0 percent on an annual basis. Furthermore, he told Fortune that the country’s most overvalued markets could see home price drops of 5 to 10 percent in the next year.

The following overpriced markets are most likely to see a drop in home prices in the next year, according to Zandi: Boise, Idaho; Colorado Springs, Colorado; Las Vegas, Nevada; Coeur d’Alene, Idaho; Tampa, Florida; Atlanta, Georgia; Fort Collins, Colorado; Sherman, Texas; Jacksonville, Florida; Idaho Falls, Idaho; Lakeland, Florida; Greeley, Colorado; Longview, Washington; Charleston, South Carolina; Albany, New York; Denver, Colorado; Clarksville, Tennessee; Greensboro, North Carolina; and Charlotte, North Carolina.