Real Estate Analysis and Commentary

Sacramento Home Prices
January 30th, 2023 1:46 PM

Sacramento, CA is One of the Most Overpriced Housing Markets in America

Demand for housing has risen sharply in 2021, and that has affected prices. According to the carefully followed S&P CoreLogic Case-Shiller Indices, home prices nationwide rose 19.1% in October, compared to the same month last year. In several markets, the figure was over 25%.

Surging demand, in addition to limited housing inventory, has created a sellers market unlike anything seen in recent memory. Homes are now selling faster than ever before – and also for more money than ever before.

The reasons behind this trend are varied. Certainly, low mortgage rates have contributed to increased demand for housing, although these have begun to rise. Further, during the COVID-19 pandemic, tens of thousands of people have departed expensive coastal cities such as New York and San Francisco, where home prices exceed twice the national median, for cities inland where prices have been lower.

Because of the high demand for housing in some markets, sellers are able to command a premium price for their homes, and in many parts of the country, homes have become overvalued compared to historical numbers.

A new report from researchers at Florida Atlantic University’s College of Business identifies Sacramento, California, as one of the most overpriced housing markets in the country. Currently, the average home in the area is selling for about $570,569, according to estimates from real estate data company Zillow. This is well above the average predicted price buyers should be paying of $455,309 – an estimate based on calculations using historical sales data.

The 25.3% premium home buyers are paying on the average house sold in Sacramento ranks as the 47th highest of the 100 metro areas covered in the report.

The ranking of the most overpriced cities is based on a methodology developed by researchers Ken H. Johnson, Ph.D., and Eli Beracha, Ph.D.


Rank City Premium paid on avg. homesale (%) Average home price ($) Expected home price ($)
1 Boise City, ID 78.4 500,137 280,406
2 Austin, TX 58.0 534,433 338,345
3 Ogden, UT 55.9 482,461 309,392
4 Phoenix, AZ 50.1 422,463 281,372
5 Provo, UT 49.8 530,171 353,892
6 Las Vegas, NV 49.4 391,346 261,958
7 Spokane, WA 48.9 402,085 269,963
8 Atlanta, GA 47.5 330,218 223,835
9 Salt Lake City, UT 47.3 544,529 369,626
10 Detroit, MI 47.2 225,601 153,230
11 Charlotte, NC 44.6 329,961 228,218
12 Stockton, CA 42.0 526,520 370,716
13 Colorado Springs, CO 41.8 452,127 318,846
14 Lakeland, FL 40.6 267,184 190,054
15 Tampa, FL 39.9 323,040 230,843
16 Memphis, TN 39.7 205,936 147,421
17 Raleigh, NC 38.8 391,444 282,093

Posted in:Real Estate and tagged: Mortgage
Posted by Bob Peterson on January 30th, 2023 1:46 PMPost a Comment

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