The New York metropolitan area is undervalued by 10.4%, according to Fitch Ratings. Home prices in the region, already some of the highest in the country, grew 5.3% year-over-year. However, New York incomes are high and growing–as are rents–making ownership relatively more attractive.
Fitch deems 28% of the 412 housing markets it tracks undervalued, with home prices at least 5% below fair local value.
The five most undervalued places Fitch highlighted for FORBES are a diverse bunch, but all are located in the Northeast or Midwest.
Homeowners considering a sale in these markets might want to wait for prices to rebound to fair value, but there’s no predicting how long that might take. Fitch contends that markets tend to return to fair value eventually, but they don’t predict when.
To determine the most undervalued housing markets in the country Fitch Ratings considered five key economic metrics: nominal income growth, population growth, unemployment, change in rental prices and change in home prices.
The list is based on the year-over-year change in these measures for the 50 largest metropolitan statistical areas in the first quarter of 2017. (MSAs are delineated by the U.S. Office of Management and Budget and encompass a core city and its surrounding suburbs).
- Detroit| Median: $225,200*
Undervalued By: 11.7%
- Nominal Income: 4.78%
- Population: 0.01%
- Rents: 0.88%
- Unemployment: 6.27%
- Home Prices: 6.52%
- New York| Median: $386,000
Undervalued By: 10.4%
- Nominal Income: 3.59%
- Population: 0.19%
- Rents: 0.84%
- Unemployment: -12.63%
- Home Prices: 5.33%
- Philadelphia| Median: $209,000
Undervalued By: 4.4%
- Nominal Income: 5.24%
- Population: 0.15%
- Rents: -0.47%
- Unemployment: -10.89%
- Home Prices: 4.08%
- Chicago| Median: $228,600
Undervalued By: 4.1%
- Nominal Income: 3.58%
- Population: -0.17%
- Rents: 0.62%
- Unemployment: -14.02%
- Home Prices: 4.18%
- Cincinnati| Median: $145,400
Undervalued By: 3.6%
- Nominal Income: 4.49%
- Population: 0.46%
- Rents: 2.11%
- Unemployment: -1.83%
- Home Prices: 4.39%
National | Median: $232,100
Nominal Income: 3.66%
Population: 0.82%
Rents: 1.83%
Unemployment: -6.88%
Home Prices: 3.7%
(Source: FORBES)
Add Comment