I’m sure you’ve heard about the shocker of house prices in 2022. Unfortunately, we’re currently in an incredibly oversaturated, overpriced housing market and seeing real estate prices drop, making it more and more difficult for potential homeowners to find a place within their budget.
If you happen to be in the lucky position where location isn’t an issue for you, you might be able to find a house that fits your needs and is in your budget by picking the right place! All you need to know is the signs of whether the housing market you’re looking at is overrated or not!
An overrated housing market is one where the price of a house is more than what it should be worth. Here are some signs that the housing market you’re looking in is overrated:
Online Valuation tools
Your first course of action is to look to an online valuation tool. An online valuation tool can tell you what you should expect for a house price, and if the asking price is significantly higher, it may be time to run for the hills!
Be wary, though; sometimes, valuation tools offered by big real estate websites are actually sneakily veiled marketing tools to make you think a house is a good deal. If you want a valuation you can trust, it’s best to consult a real estate professional.
Compare Your Potential Property
A ‘comp’ is where you compare the property you’re looking at or selling with other ones in a one-mile radius with similar attributes. For example, you should be looking for properties with similar square footage, a number of facilities, backyard size, etc., to see if the prices are congruent with other homes in the area.
For the best data on comps, look to a real estate agent or an appraiser, as they will have access to complete details of the area and can cater to your needs as a buyer.
Make Good Use of the HPI
The HPI is the ‘Federal Housing Financing Agency’s House Price Index’, and it will tell you all about real estate transactions spanning back decades. That way, you can look at the value trends for the home you’re looking at or planning to sell and get an accurate estimate of its true value.
Once you’ve understood a home’s actual worth in a given location, you should compare it to asking prices by making a median of the houses worth in the area. An ideal rule of thumb to take heed of is if asking prices are 10% over that of the median you’ve figured out; then they are overpriced.
Plenty of houses in the U.S are overpriced right now, so don’t be discouraged if you keep failing to find something within your budget. Instead, just make sure you’re clear on your budget and the median house value of a given area so that you can aptly determine whether the housing market you’re looking in is too overrated to be worth it in the long run.