California Cities Have the Most Overvalued Housing

A blog about business and economics.
June 25 2014 1:13 PM

California Cities Have the Most Overvalued Housing

California boasts some of the most overvalued homes in the country.

Photo by Kevork Djansezian/Getty Images

Are homes in California really worth their high costs? It depends where you're looking, but eight of the 10 most overpriced housing markets in the U.S. are in the Golden State, according to a new report from online real estate site Trulia. On average, homes in those metro areas are overvalued by 11 percent, compared with Trulia's estimate that homes nationwide are undervalued by 3 percent.

Trulia assesses home values by comparing current prices to historical prices, incomes, and rents—factors that reflect how much people can and will pay for housing—to come up with a "fundamental value." Orange County is overvalued by 17 percent relative to fundamentals, the most of any U.S. metro area. Honolulu and Los Angeles are right behind with 15 percent overvalued ratings. Austin also makes it into the top five spots (overvalued by 13 percent) and then the rest are filled by California, as you can see in the chart below:


Chart by Trulia


Despite the seemingly inflated prices, Trulia Chief Economist Jed Kolko thinks bubble-phobes can relax, because these metro areas are "not seeing the return of last decade's bubble," he writes. Back in 2006, homes were overvalued by 71 percent in Orange County, 79 percent in Los Angeles, and a whopping 92 percent in Riverside–San Bernardino. California's markets today are much less overvalued by comparison. In fact, the only city on the top 10 list that looks more overvalued now than it did in 2006 is Austin, and that's probably because it was barely overvalued to begin with.

Alison Griswold is a Slate staff writer covering business and economics.



The World’s Politest Protesters

The Occupy Central demonstrators are courteous. That’s actually what makes them so dangerous.

The Religious Right Is Not Happy With Republicans  

The XX Factor
Oct. 1 2014 4:58 PM The Religious Right Is Not Happy With Republicans  

How Did the Royals Win Despite Bunting So Many Times? Bunting Is a Terrible Strategy.

Catacombs Where You Can Stroll Down Hallways Lined With Corpses

Homeland Is Good Again! For Now.


Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.


How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

  News & Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
Brow Beat
Oct. 1 2014 6:39 PM Spoiler Special: Transparent
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.