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By Michele Lerner
Forbes Magazine recently surveyed the 40 largest cities in the US to determine which cities still have the most overpriced housing. Investors should look carefully at these cities and be cautious when purchasing property there, since the last thing an investor wants (or any buyer, for that matter) is to overpay for a house.
Of course, working closely with a real estate agent or becoming extremely knowledgeable about your local real estate market goes a long way toward avoiding an expensive mistake.
Author Francesca Levy and Forbes researchers ranked metro areas on:
- The percentage of homes that had seen price reductions, since this indicates that the properties had inflated prices;
- The median number of days on the market, since overpriced homes tend to sit on the market longer than those that are fairly priced;
- The ratio of median list price to median absorbed price. The absorbed price is the last price before it went off the market, which includes homes that have not necessarily had a closed sale.
In addition, the article took into consideration the five-year forecast for percentage change in home values by the S&P/Case-Shiller Home Price Index. This indicator was included because of the possibility of home prices rising in some markets, thus making even an above-average priced home a potentially good investment.
The top ten most overpriced metropolitan areas:
- Orlando-Kissimmee, Florida
- Miami-Fort Lauderdale-Pompano Beach, Florida
- Jacksonville, Florida
- Baltimore-Towson, Maryland
- Chicago-Naperville-Joliet, Illinois/Indiana/Wisconsin
- San Antonio, Texas
- Denver-Aurora, Colorado and Tampa-St. Petersburg-Clearwater, Florida (Tied)
- Indianapolis-Carmel, Indiana
- Austin-Round Rock, Texas
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee
For the complete list, see over at Forbes.
Michele Lerner, a real estate expert and freelance writer with 20 years of experience, is the author of “HOMEBUYING: Tough Times, First Time, Any Time”.
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