Houses
Almost half, 49%, were overvalued by 10% or more, according to Fitch's Sustainable House Price model, which has been temporarily revised to account for current market dynamics.
In the fourth quarter, 52% of MSAs were overvalued by 10% or more.
Still, nationwide, overvaluation is starting to flatten out, said Sean Park, a director at Fitch. In the first quarter, on a population-weighted average basis, home prices were overvalued by 7.6%.
"But the ongoing rebound in quarter-over-quarter home prices is expected to lead to only a continued moderation in overvaluation," Park said.
High prices are affecting
However, data from later in 2023 presents a mixed bag as to whether valuations are likely to soften. The CoreLogic Home Price Index rose 2.5% annually in July, after
"Annual home price growth regained momentum in July, which mostly reflects strong appreciation from earlier this year," said Selma Hepp, CoreLogic chief economist in a press release. "Nevertheless, the projection of prolonged higher mortgage rates has dampened price forecasts over the next year, particularly in less-affordable markets."
According to the Fitch data, properties in only two of the 50 largest MSAs were undervalued in the first quarter: Detroit and Las Vegas. Another 11 markets were described as having sustainable prices.
Nationwide, 33 MSAs are undervalued, while in 80 more, homes have sustainable valuations.
But 82 are overvalued by 5% to 9%, 90 between 10% and 14%, 55 between 15% and 19%, 34 between 20% and 24% and 7 between 25% and 29%.