SALT LAKE CITY — Ogden and Salt Lake City rank in the top ten list of overvalued markets, meaning buyers are paying high premiums to purchase homes there.
Rising mortgage rates—which are now at the highest level in 12 years—still haven't reduced home prices, with buyers paying premiums in 99 of 100 markets surveyed in a national survey.
Average rates on a 30-year mortgage are now at 5.28 percent, but markets around the country are still extremely over-valued, meaning buyers are paying above what they should be spending based on past pricing trends.
Only Boise, Idaho had a drop in its housing premium in March, but was still by far the most over-valued market, with buyers paying 76.39 percent over what is traditionally the fair market value.
Ogden was ranked the third most over-valued market in the country, with buyers paying a premium of 63.33 percent. Salt Lake City came in ninth, with buyers paying 53.77 percent more for a home than previous pricing patterns would indicate.
Researchers at Florida Atlantic University that conducted the study said that buyers aren't just wildly overpaying for houses; paying such high premiums means that it will be a long time before their homes can be resold for an acceptable profit.
But there is some good news; they also say that unlike the housing recession of 2007—2009 when some houses lost more than half of their value, the shortage of homes for sale will prevent a similar crash.
“At the peak of the last housing cycle, we had an oversupply of housing units around the country, so when prices began to fall, there was nothing to catch them, and we witnessed a monumental crash,” said Eli Beracha of FAU's Hollo School of Real Estate. "The current shortage of homes for sale will help put a floor under just how far prices can fall this time around.”
Because areas such as New York City and San Francisco have traditionally high prices, they are considered the least over—valued.
Most at risk are areas such as Detroit and Memphis, where minimal to no growth in population could see dramatic price drops.
The full rankings with interactive graphics can be found here.