The country’s major markets are peaking, with a bubble in two cities, according to the Beracha, Hardin & Johnson Buy vs. Rent Index from Florida Atlantic University and Florida International University. The Dallas and Denver metropolitan areas are approaching a one on the Index scale, which indicates the market is overheated, with demand downwardly pressured.
“Both Dallas and Denver are significantly overheated,” says Ken Johnson, Ph.D., a creator of the Index and associate dean and professor in FAU’s College of Business. “Residential real estate prices in Dallas are significantly above their long-term pricing trend, and I anticipate pricing corrections in the near future.”
“Prices are still appreciating in both metros, but at a decreasing rate, suggesting that the current upward pattern in property appreciation is nearing an end,” says Eli Beracha, Ph.D., a creator of the index and director of the Hollo School of Real Estate at FIU.
Dallas is at .92 in the Index; Denver is at .77.
For the market overall, there are burgeoning “events” related to price, according to Johnson.
“These events could be as benign as flattening prices and extended marketing times in less overheated cities to significant price declines in the more overheated metros,” Johnson says. “We are nearing the peak of the current residential cycle. The ship is turning once again.”
Source: FAU/FIU
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