Texas Is One Of The Most Undervalued States
March 5, 2008
House Price Valuations
National City Corp’s approach to determining statistically normal house values considers not only house prices and interest rates, but household incomes, population densities and any historical premiums or discounts metropolitan areas have exhibited over time. They examined these factors for 330 metro areas now accounting for 78 percent of all existing housing units in America and 93 percent of all related real
estate value, to determine what house prices should be, in this statistical sense.
Based on an historical examination of 102 actual metro area price corrections during the 1985-2007
period we consider valuations in excess of +32 percent severe and present a risk of substantial price declines (10 percent, or greater) going forward. Such areas are designated as “overvalued”. Valuations between ±15 percent are consistent with one standard deviation of the historically normal distribution, and considered “fairly valued”, accordingly. Between overvalued and fairly valued are areas above the historically normal range, but not so high as to be at risk of substantial price decline. They call these areas “moderately overvalued”. Finally, any area below the historically normal range, below -15 percent, is considered “undervalued”.
According to the latest analysis, the incidence of over valuation is declining sharply. Twenty-one
markets surpassed that threshold during the fourth quarter, down from 37 markets during the third
quarter.* Over valuation was most pervasive during the second quarter of 2006, at which time 58 metro
areas were considered at high risk.
| Metropolitan Area House Valuations 2007/Q4 | ||
| Price | Over- | |
| (,000) | Valuation | |
| Abilene, TX | $78.4 | -13.3%% |
| Amarillo, TX | $96.0 | -6.6% |
| Austin, TX | $173.6 | -10.5% |
| Beaumont, TX | $83.2 | -12.4% |
| College Station-Bryan, TX | $104.1 | -25.8% |
| Corpus Christi, TX | $98.4 | -14.3% |
| Dallas, TX | $134.5 | -30.0% |
| El Paso, TX | $109.0 | -14.2% |
| Fort Worth, TX | $111.7 | -24.9% |
| Houston, TX | $119.3 | -29.1% |
| Killeen, TX | $103.8 | -20.0% |
| Lubbock, TX | $83.9 | -16.2% |
| McAllen, TX | $61.4 | -20.9% |
| Midland, TX | $124.7 | -14.7% |
| Odessa, TX | $81.5 | -2.8% |
| San Angelo, TX | $92.2 | -0.1% |
| San Antonio, TX | $113.7 | -12.1% |
| Sherman, TX | $89.0 | -10.3% |
| Tyler, TX | $108.8 | -12.3% |
| Waco, TX | $94.6 | -9.4% |
| Wichita Falls, TX | $80.5 | -15.4% |
Source: National City Corp
Comments
