Looking at the overvalued areas
At first glance, the urban triumvirate Fitch identifies may seem strange. Buffalo’s claims to fame are chicken wings, blizzards and a football team that couldn’t win a Super Bowl despite four consecutive appearances. In Memphis, Elvis left the building long ago, although the city is still a mecca for aspiring musicians. And in between funkier midwest locales Chicago and Cleveland, Indianapolis is regarded as more of a pit stop.
If these three overvalued areas collectively raise the question “why?” — the actual prices might give a clue. Homes in these cities are relatively cheap, and cheap property is in high demand. “Overvalued” may sound financially ominous, but it isn’t quite the same as out of reach.
Here’s an overhead view: the median national home price, according to Redfin, is $442,479 as of June. By comparison, the median home price in Memphis is $190,000, in Buffalo it’s $195,312 and in Indianapolis it’s $255,000.
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Learn MoreA topsy-turvy housing market
The state of overvaluation brings with it pros and cons, some not so obvious. On the one hand, as housing values go up, so do sales prices. That could leave you in luck if you’re in one of the most overvalued markets and want to put your house up for sale.
Trouble is, any new digs you purchase must be affordable, even if the property has better value. This can be a challenge in part due to elevated mortgage rates.
If home values are based on historical prices, perhaps it’s time to reconsider the past in light of the present — including the forces of inflation. After all, the buying power of $100 has been cut in half since 1996. And no matter how you slice it, a new home is an increasingly expensive proposition.
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