Housing markets across the United States have witnessed a general tightening in inventory as well as high prices, though down a bit from their peaks in 2021 and 2022 before the regiment of rate hikes instituted by the Federal Reserve commenced. While prices may be down from their recent highs, affordability still remains a major issue in many major housing markets.
We wanted to identify the most overpriced housing markets in the U.S. based, not simply on possessing a high sale price, but on key metrics such as the sales-to-list ratio and the percentage of homes in a city that sold above asking price. To get these metrics, we sourced data from Redfin
Read on to find out the most overpriced housing markets in America.
The Most Overpriced Housing Markets of 2023
In order to generate a list of cities, we limited our scope to the 200 largest cities in the U.S. by population, per the Census Bureau’s 2021 American Community Survey 5-Year Estimates, the latest data available. From here, we analyzed the housing markets in terms of the metrics mentioned above, with the two most critical being sales-to-list ratio — which tells you if homes are selling for more than they were originally listed by having a value of over 100% — and the percentage of homes that sold above their asking price. We then scored all these factors and ranked the cities accordingly.
Below you’ll find a table detailing the top 20 most overpriced housing markets in America based on our criteria:
Incredibly, in Lubbock, every home sold in the month of July 2023 was sold for above its asking price. No other housing market experienced a rate of 100% of homes sold above asking price. The current median sale price in Lubbock is $350,000, up 45.8% from July 2022 when it was $240,000. While home prices have risen year-on-year, so has inventory in Lubbock. From 659 available homes for sale in July 2022, inventory grew by 44.2%, reaching 950 available homes in July 2023. At the same time, the median days on market for a home for sale in Lubbock leapt up dramatically, by 425%, from 8 days in July 2022 to 42 days in July 2023. Indeed, a separate report by the Lubbock Association of Realtors for July 2023 revealed that homes are spending an estimated 80% more time on the market compared to the same time last year, according to KLBK News.
In the second most overpriced housing market, Sunnyvale, 81.3% of homes sold in July 2023 were sold above their asking price. That’s up almost 30 percentage points from July 2022, when the percentage was 52.9%. The year-over-year change in prices in Sunnyvale has also been substantial. From a median sale price of a little over $1.6 million in July 2022, Sunnyvale’s median price rise by 30.6% to roughly $2.09 million in July 2023. The sale-to-list ratio in Sunnyvale is 106.6%, which is the fourth highest ratio in the study.
The third most overpriced housing market is Worcester, which is about halfway between Springfield and Boston, Massachusetts. In the Worcester housing market, 76.1% of homes sold in July 2023 sold above their asking price, which is up slightly from last July’s 73.9%. Both inventory and the number of active listings have declined year-over-year in Worcester, by 63.4% and 40.3%, respectively. These factors are helping contribute to continued high home prices in Worcester, with the first month its median sale price reaching $400,000 occurring in May 2022. Back in the pre-pandemic days, in July 2019, the median sale price in Worcester was only $269,950. Unfortunately, it seems those days are long gone.