With Strong Price Increases, is Houston Now Overvalued?

by Peter Thomas Ricci

We’ve come a long ways since the market crash, but does new research suggest we’ve gone too far?


With asking prices up in Houston by 13.4 percent, the market the market may be overvalued to market fundamentals, according to a new report from Trulia.

Titled the “Bubble Watch,” the report analyzes home prices in the nation’s metro areas and compares them with market fundamentals, all in the hope of – as the title would reveal – catching the next housing bubble before it becomes unruly.

Houston Overvalued to Market Fundamentals

Houston, the Bubble Watch found, is now 10 percent overvalued, which actually makes it among the most overvalued metros area in the nation.

That being said, in 2006’s first quarter (when the housing bubble was at its peak) Houston was a mere 1 percent overvalued, so its current overvaluation does not necessarily mean that we’re in another housing bubble – rather, it shows that Houston has never lost its step, and instead continued to grow through the downturn; but still, it’s fair to say that we should stay on our toes, as inventory remains low and oil prices continue to decline.

Take a look at our graph below to see how our local housing values compare with the rest of the nation:

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