We all know the Austin real estate market is hot. But a new study suggests that it’s way too hot.
A data analysis by researchers at Florida Atlantic University and Florida International University shows Austin ranks second among the most overrated metro home markets in the country. Based on past prices, homes in the Austin area are selling 50.72 percent more than they should, the study says.
In July, the average home sales price in the Austin area rose to $ 480,000, 37 percent more than the same time last year, according to the Austin Board of Realtors.
In an apparent contradiction to the Florida study, WalletHub recently ranked Austin as the second most attractive housing market in the United States.
For their study, Professor Ken Johnson of Florida Atlantic and Professor Eli Beracha of Florida International combed data from real estate platform Zillow and other publicly available sources. Their analysis places Boise, Idaho, on the list of the most overrated home markets in the country’s 100 largest metropolitan areas. They concluded that homes in the Boise area were selling 80.64 percent more than they should.
“In the top 10 markets, prospective buyers should consider renting and reinvesting money that they would otherwise have invested in home ownership. It has been shown that renting and reinvesting often outperform owning when it comes to wealth creation, “Johnson, real estate economist and assistant dean of Florida Atlantic College of Business, said in a press release.
The analysis includes single-family homes, townhouses, condominiums, and cooperatives.
No other major metropolitan area in Texas ranks in the top 10 most overrated home markets besides Austin:
Dallas-Fort Worth ranks 19th with homes selling 31.57 percent more than they should.
San Antonio ranks 48th, with homes selling for 20.99 percent more than they should.
Houston ranks 57th, with homes selling 17.99 percent more than they should.
“The data allows readers to quickly see the premium or discount they are paying on average on their subway and enable them to make more informed decisions about their real estate investments,” the researchers explain.