Homes located in a number of states in the country are being sold at prices over the long-term average, according to a report.
In the fourth quarter of 2023, homes in the United States were overvalued by 11.1%. The overvaluation of homes occurred in about 90% of all metro areas in the country, according to a new report from Fitch Ratings.
That being said, the sharpest increase in overvalued homes occurred in a handful of Southern states-specifically Alabama, Arkansas, Montana, Tennessee, and South Carolina.
5 States With the Most Overvalued Homes
1. Tennessee
Year-over-year price change: 8.3%
Median listing price: $443,550
Tennessee has a lower cost of living and the lack of state income tax has attracted an influx of new residents moving from states with higher living costs. This increase in demand is now outpacing the state's supply, leading to a rise in home prices.
2. Arkansas
Year-over-year price change: 9.4%
Median listing price: $299,900
Much like Tennessee, Arkansas also has a very affordable cost of living. This---in conjunction with the state's natural beauty, growing job market, and high quality of life--- has attracted more professionals and young families and a surge in home prices.
3. South Carolina
Year-over-year price change: 7.9%
Median listing price: $351,370
South Carolina has attracted new residents due to the abundance of its coastal cities and increasing job opportunities. Additionally, South Carolina also has a lower cost of living compared to other states in the Northern region.
4. Madison
Year-over-year price change: 5.6%
Median listing price: $649,000
Apart from a low cost of living, Madison features natural landscapes and wide-open spaces that have become attractive to remote workers and wealthy Americans. This demand has contributed to an increased demand for housing, which drove up prices.
5. Alabama
Year-over-year price change: 2.2%
Median listing price: $330,950
One of Alabama's main draws is its low cost of living. However, the state also offers affordable housing options, reasonable property tax, and lower overall expenses for its residents. This makes it an attractive place for professionals and families, leading to higher home prices.
