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NC Cities Among the Most Overvalued Housing Markets in the US

According to a recent study by Florida Atlantic University, several North Carolina cities have made the list of the top 100 overvalued homes in the United States.

The study, conducted by Denise Gravatt, Eli Beracha, and Ken H. Johnson, uses open-source data from third-party housing data providers to estimate the degree of over- or under-pricing of a given housing market relative to its long-term pricing trend.


Methodologies

The study uses a simple Housing Index (HI) time trend, developed from the data of companies like Zillow, to establish a fundamental long-term pricing trend for each housing market. The natural log of the HI, rather than the HI itself, is utilized to capture the index percentage change rather than its nominal change in the given housing market over time. This allows for a more accurate estimate of any local housing price trend.


Using this methodology, the study calculates the percentage difference between where housing prices should be (the expected value of HI) and the market's actual HI scores at a given time. Positive values for this calculation represent a premium or the degree of overpricing, while negative values represent a discount or the degree of underpricing.



North Carolina Cities on the List

According to the study, the following North Carolina cities are among the top 100 overvalued homes in the United States:

  • Charlotte: ranked #5 with a premium of 54.04%

  • Durham: ranked #16 with a premium of 46.19%

  • Greensboro: ranked #18 with a premium of 45.58%

  • Winston: ranked #22 with a premium of 45.11%

  • Raleigh: ranked #23 with a premium of 43.87%

Do you agree with the findings of this study based on what you are seeing in your local markets? Do you trust a study based on data from Zillow?


Sound off in the comments below or share your thoughts with a colleague in an upcoming CE Class!

References:

"Gravatt, D., Beracha, E., & Johnson, K. A Note on the Estimation of the Degree of Over- or Under-Pricing of Housing Markets Relative to their Long-Term Pricing Trend. Florida Atlantic University.

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3 Comments


Do I trust a study based on ANYTHING coming from Zillow??? You mean the company who gives homeownersa price for their home, without a human ever seeing their home, or their yard, or their neighborhood, In person? You mean the same Zillow that started devaluating people's "Zestimates" by Ten's of Thousands of Dollars 3 summers ago, for no reason, other than the fact they were about to launch an IBUYER program and try to buy people's homes at Under market value, bc they just told them their home was worth less? NOPE I don't trust ANYTHING that comes from Zillow. !

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Absolute phooey, in my opinion. By definition if buyers are willing to pay it, then the market is supported. Also as a RE School please be cautious. In NC the word "value" only has one meaning.. and appraisers aren't any part of this article. This an OP ED piece on market prices, or home prices, or "market value" - not value. Words mean things.. especially for educators. :)

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Dina Braun
Dina Braun
Jan 26, 2023

I don't agree. I look at home prices everywhere. I have family in VA. Richmond and surrounding areas. Those prices are as high and in many cases even higher! What's the draw to Richmond? Nothing. Charlotte prices can not go lower, it would n't make sense in one of the most demanding areas. My thoughts :-)

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