WASHINGTON — Demand that continues to outstrip supply — and wages that aren’t keeping up with rising home values — have tipped the D.C. market into the “overvalued” category.
Real estate firm CoreLogic says 46 percent of the top 50 housing markets in the country are now what it considers overvalued.
Its Market Conditions Indicator compares home prices with their long-run, sustainable levels, which are supported by such fundamentals as disposable income.
It defines markets that are overvalued as one in which home prices are at least 10 percent higher than the long-term, sustainable level.
“The combination of steadily rising purchase demand along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of this year,” said Frank Martell, CoreLogic president and CEO.
“While mortgage interest rates remain low, affordability cracks are emerging as over a third of U.S. top cities are now overvalued,” he said.
Denver, Las Vegas, Miami and Houston are among other top metro areas that CoreLogic now labels as overvalued.
Home prices in the D.C. metro area increased 3.9 percent between July 2016 and July 2017. In the District itself, the median price has risen 4.7 percent in the past year.