5 Most Overvalued Housing Markets in 2025, According to Experts
Something’s gotta give. Too many Americans are paying far too much of their income to keep a roof over their heads, new data shows — with experts warning things can’t go on like this forever.
In a survey of the country’s most overvalued housing markets, US News & World Report found a number of major cities where mortgage payers in late 2024 could expect to be squeezed to the tune of 60% or more of the per capita income for the privilege.
The 5 Craziest Markets Right Now
1. Kahului-Wailuku-Lahaina, Hawaii – 115.4%
Though the 2023 fires destroyed thousands of homes and displaced 12,000 residents, experts noted for non-local buyers, the house prices were probably relatively affordable, but for locals, a home is now essentially out of reach. VW PICS/Universal Images Group via Getty Images
Maui, wowie. Even before the 2023 fires that destroyed thousands of homes and displaced 12,000 residents, analysts explained, the Valley Isle had a serious housing shortage. "On the supply side, a remote location with the added complexities of steep shipping prices and delays for construction materials add to costs, as have geographic limitations to new housing and a limited supply of skilled workers," the report stated. "On the demand side, intense competition from not just local buyers but also retirees and investors from out of state, who plan to rent out their homes for passive income." The experts noted that for the non-local buyers, the house prices were probably relatively affordable. Unfortunately for many locals, a home is now essentially out of reach.
2. San Francisco-Oakland-Hayward – 68.3%
New data reveals that despite a double digit drop in average home prices in San Francisco, most individuals can’t afford the housing prices in the area. gdvcom – stock.adobe.com
San Francisco may not be your cup of clam chowder — but that’s fine, because according to new data, most people can’t afford it. While another set of numbers published last month revealed a double digit drop in average home prices in the region, it’s still far from a bargain. The report blamed "years of housing supply not keeping up with job growth" for the exorbitant prices paid California-wide, generally speaking — with the Bay tapping in as the worst offender.
3. Riverside-San Bernardino-Ontario, California – 67.8%
Riverside, California, has affordable bedroom communities for the pricier spots in the region. Jacob – stock.adobe.com
Sometimes up to two hours from the beach, if not more, many of the towns and cities in Southern California’s Inland Empire sprang to life as affordable bedroom communities for the pricier spots in the region. Now, median-earning homeowners are shouldering a larger burden than some of their counterparts near the coast, according to the study.
4. San Diego-Carlsbad – 66.3%
A housing shortage and prices rising faster than wages have turned a recently relatively affordable Southern California standby into a place where average income earners are essentially squeezed out of the market.
5. Los Angeles-Long Beach-Anaheim – 66.0%
"The loss of an estimated 12,000 structures in the recent Los Angeles area fires will only exacerbate the high costs for both buyers and renters," study authors predicted.
Conclusion
The data is clear: many Americans are shouldering an unsustainable burden when it comes to housing costs. As the experts warn, things can’t go on like this forever. Something’s gotta give.
FAQs
Q: What is the current national average of income-to-housing costs?
A: 36.3%
Q: What is the threshold for "overvalued" housing markets?
A: Above the current national average of 36.3%
Q: What are some of the factors contributing to the high housing costs in these markets?
A: Supply and demand imbalances, geographic limitations, and intense competition from non-local buyers.
