Idaho Joins Vegas as Most Overvalued U.S. Housing Markets

The latest state dinged with an “overvalued” housing market is among the least-populated in the entire country: Idaho.

That’s right, Idaho. Population: 1.65 million. Area: 87,300 square miles. Population density: 20 people per square mile (compare that to Manhattan: 67,000 people per square mile). Despite that, Idaho has some of the most overprices real estate in the country, according to Fitch Ratings, New York.

The company’s U.S. RMBS Sustainable Home Price Report–Third-Quarter 2018 says home prices in Idaho and Nevada are moving out of step with most of the rest of the country.

The report notes home prices appear to be valued in line with long-term sustainable levels for much of the United States, rising by 4 percent in the second quarter. “Much of the growth in recent years has emanated from less expensive homes,” said Managing Director Grant Bailey. “Low-tier home prices have jumped more than 80 percent, while prices for high-tier homes have risen only 35 percent since 2012.”

However, the report notes 22 percent of the country’s housing markets are more than 10 percent overvalued. Leading this category are major cities in Nevada and Idaho. Fitch said hme prices have increased nearly by 17 percent throughout Nevada in the past year alone; home prices in Idaho have become “increasingly frothy,” Bailey said, rising by more than 13 percent over the past year. Other overvalued markets in the U.S. include North Dakota and Oregon (both 15-19 percent overvalued).

Earlier this month, CoreLogic, Irvine, Calif., issued its monthly Market Condition Indicators, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock. It rated 40 percent of metropolitan area housing markets as “overvalued” as of July. Twenty percent of the top 100 metropolitan areas were “undervalued” and 40 percent were “at value.” When looking at only the top 50 markets based on housing stock, 50 percent were overvalued, 12 percent were undervalued and 38 percent were at value.

If you’re looking for a more realistic market, Fitch suggests Ohio, where home price growth is now viewed as sustainable after having been deemed undervalued for the past few years.