Too hot to handle

Austin ranks No. 2 among most overvalued housing markets in the U.S.

Austin ranks No. 2 among most overvalued housing markets in the U.S.

Home for sale sold sign
Austin homes: maybe not worth every red-hot cent? Photo by Ariel Skelley/Getty

We all know that the Austin housing market is hot. But a new study suggests it’s entirely too hot.

A data analysis by researchers at Florida Atlantic University and Florida International University shows Austin ranks second among the most overvalued metro home markets in the country. Based on past pricing, homes in the Austin area are selling for 50.72 percent more than they should, the study says.

In July, the median sale price of a home in the Austin area soared to $480,000, up 37 percent from the same time last year, according to the Austin Board of Realtors.

In what seems to be a contradiction to the Florida study, WalletHub recently ranked Austin the second most attractive housing market in the U.S. The WalletHub study looked at 18 metrics, including job growth and appreciation of median home prices.

For their study, professor Ken Johnson of Florida Atlantic and professor Eli Beracha of Florida International combed through data from real estate platform Zillow and other publicly available sources. Their analysis puts Boise, Idaho, atop the list of the most overvalued home markets among the country’s 100 largest metro areas. They concluded that homes in the Boise area are selling for 80.64 percent more than they should.

“In the top 10 markets, potential buyers might want to consider renting and reinvesting money that they otherwise would have put into homeownership. Renting and reinvesting has been shown to often outperform ownership in terms of wealth creation,” Johnson, a real estate economist and associate dean at Florida Atlantic’s College of Business, says in a news release.

The analysis covers single-family homes, town homes, condos, and co-ops.

No other major metro area in Texas appears alongside Austin among the 10 most overvalued home markets:

  • Dallas-Fort Worth lands at No. 19, with homes selling for 31.57 percent more than they should.
  • San Antonio lands at No. 48, with homes selling for 20.99 percent more than they should.
  • Houston lands at No. 57, with homes selling for 17.99 percent more than they should.

“The data allows readers to quickly see the premium or discount that they are paying in their metro, on average, and further allows them to make more informed decisions about their real estate investments,” the researchers explain.