Extremely Overvalued... That's Us.
The PD reports: "Sonoma County ranked 37th among the 71 metropolitan areas identified as "extremely overvalued" in the first quarter. The study concluded home prices in Sonoma County were 52 percent overvalued, based on historical prices, incomes, population density and mortgage rates."
"More than a third of the homes in the United States are "extremely overvalued" and are concentrated in markets in California and Florida at the greatest risk of falling prices, according to a study issued Monday."
"Napa County was ranked 16th in the study. Home prices in Napa County were 63.5 percent overvalued in the first quarter."
"When prices do fall from overvalued levels, they typically fall by about half the overvaluation, said Richard DeKaser, chief economist at National City Corp. The correction usually takes three and a half years."
"Prices in Sonoma County have leveled as sales have dropped, compared with a year ago.
Economists projected the slowdown. But they have said prices likely would not decline significantly in Sonoma County unless the region was hit by a recession and significant job losses, which is not forecast."
"The study used the most recent sales-price data from the Office of Federal Housing Enterprise Oversight."
'"Price appreciation is slowing but it continues at a historically high rate, boosted by especially strong increases in already overvalued markets," DeKaser said. The most overvalued markets continue to have the highest price appreciation, he said."
"Homes in Naples, Fla., were deemed to be 102 percent overvalued, the economists said. Other highly overvalued markets in California included Salinas, Merced, Stockton, Santa Barbara, Madera and Riverside."
"Among other big cities, Miami was overvalued by 64 percent, Los Angeles by 61 percent, Oakland by 47 percent, San Jose by 44 percent, Nassau and Suffolk counties in New York by 44 percent, and Phoenix by 43 percent."