Is Rhode Island Real Estate Overvalued?

Is Rhode Island Real Estate Overvalued?

Moody's economist Matthew Walsh says U.S. home prices on a national basis are overvalued. 

The Moody’s report states that the national median prices are currently 15.7% above their fundamental value.

According to a Business Insider report, Walsh believes home prices face another 4-4.5% decline in the coming months. “The model accounts for variables like construction costs, household formation rates, and where home prices stand relative to median incomes. Nationally, homes are the least affordable relative to incomes that they've been in four decades,” Walsh said. 

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Rhode Island is ranked by Moody’s as 18.67% overvalued.

In contrast, Massachusetts is only 8.09% overvalued, according to Moody’s analysis. And Connecticut is just 6.92% overvalued.

Real estate prices in Rhode Island continue to spike. The median price of a single-family home in September hit $455,000 — up 9.4% year-over-year.

“While costs are up, real estate remains one of the best long-term investments. In addition to providing a place of shelter and comfort, it’s a great wealth builder. That’s why it’s so important that we find avenues to give everyone access to home ownership,” said Bryant Da Cruz, President of the Rhode Island Association of Realtors.

The state with the most overvalued real estate market is Idaho at 41.87%.

The least overvalued is Maryland -- its real estate is, in fact, undervalued by -9.17%.