Is YOUR home overvalued? Ratings agency Fitch estimates US properties are selling for 10% more than their true value on average – but experts reveal the ten neighborhoods where you can still find a bargain

US properties are selling for almost 10 percent above their real value, according to a damning report new report from rating agency Fitch.

Homes in about 88 percent of U.S. metros were “overvalued” in the second quarter of 2023, analysts said — after the average sales price of properties rose to about $387,000 in November.

And Fitch predicts the problem will only worsen next year, with house prices expected to rise by as much as 3 percent as expected rate cuts add fuel to the market.

But separate analysis GoBanking Rates suggests buyers can still find a bargain. Researchers from the outlet used data from the real estate portal Zillow to identify the twenty neighborhoods where homes were most “underpriced.”

Cape Coral (FL) came out on top, with a typical home there underpriced by about $249,851, according to the analysis. This is because the average home value in the area is $419,840, while the average property was for sale in 2023 for $169,989.

It was followed by Eau Claire (WI) and Urban Honolulu (HI), where the properties were calculated to be underpriced by $110,875 and $72,819, respectively.

The top five was completed by Punta Gorda (FL), San Francisco (CA) and Milwaukee (WI).

But the neighborhoods appear to be an anomaly compared to the rest of the US after Fitch raised alarms about inflated home prices.

All told, the agency expects house prices to rise by between 0 and 3 percent this year, before rising again by between 2 and 4 percent in 2025.

It says: 'This will continue to impact affordability, especially for first-time homebuyers and first-time buyers, limiting demand.'

Researchers added that the top three most overvalued markets were: Charleston, South Carolina; El Paso, Texas; and Camden, New Jersey.

Buyers have faced the least affordable housing market in recent memory this year, thanks to rising mortgage rates and continued high real estate prices.

The average interest rate on a 30-year fixed-rate mortgage rose toward 8 percent in 2023, but has since fallen to 6.67 percent, according to a government-backed lender. Freddie Mac.

It means an average buyer now has to pay about $800 more per month on their mortgage payments than if they had bought a mortgage two years ago – when interest rates hovered around 3 percent.

Higher interest rates and rising home prices mean buyers are facing one of the least affordable markets in recent memory

At the current rate, someone buying a $400,000 home with a 5 percent down payment would have to pay $2,444 per month on a 30-year fixed mortgage.

But if they had bought in December 2021 – when interest rates were 3.10 percent – ​​they would have paid just $1,623.

But despite declining buyer activity, higher interest rates have failed to pour cold water on the US real estate market as expected. This is because there is a major shortage of available housing.

Figures from the National Association of Realtors (NAR) show that the average sales price for existing homes – excluding new construction homes – rose for the fifth month in a row in November to $387,600. It represented an increase of 4 percent compared to the same period last year.

“Housing prices continue to rise,” Lawrence Yun, NAR's chief economist, said in a statement. “Only a dramatic increase in supply will dampen price increases.”

As a result, most experts agree with Fitch's predictions that home prices will either remain flat or rise next year.