- Homes in 91% of US metro areas were overvalued in the third quarter, Fitch Ratings reported.
- Home prices are overvalued by 11.1%, an uptick from prior quarters, as wage growth lagged.
- December notched the highest annual price gain since 2022, S&P Global found.
The US housing market is seeing some signs of loosening amid an uptick in sales and inventory, but last year’s price growth has only intensified the overvaluation in the market, Fitch Ratings wrote on Friday.
Homes were overvalued by 11.1% as of the third quarter, a trend extending to 91% of US metro areas. Given that prices kept rising into the fourth quarter, Fitch expects overvaluation to have continued through the end of last year.
“There are signs of a gradual thawing in the U.S. housing market, as indicated by slight improvements in new home sales and inventory,” the ratings agency said. “Challenges such as high mortgage rates and elevated home prices, which aggravate the affordability issue, continue to moderate the pace of this normalization.”
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JPMorgan Chase recently took a significant loss on a real estate investment in Los Angeles. The bank’s Investment Management division sold a large apartment complex in the Little Tokyo district for $86.1 million, which was $29.9 million less than the $116 million they originally paid for it in February 2020. This sale reflects the broader challenges in the commercial real estate market, including high interest rates and low occupancy rates.