SFGate reported today on a new study that shows that Austin, Texas, was more overvalued than San Francisco. I thought, how could that be? Our burritos totally kicked their burritos' ass!
But overvalued actually pertains to the price of houses in a city in relation to their real estate value. Essentially it means “bang for your buck." Being overvalued also means that house prices are statistically higher than they should be. Austin's home prices rose 19% this year making me glad for once that SF was not at the top of a list. Trulia's study says that when a city has a high rate of overvalued real estate the market may be close to a real estate bubble and then a crash. Which would be no fun for anyone.
Still as we all know, living in SF is still expensive and it earns a fourth place spot in the study. (Los Angeles and Orange County were second and third most overvalued, respectively; Oakland also made the list, at #10.) The SFGate article illustrated SF’s 12% housing price increase by showing side-by-side pictures of what a $750k Victorian house looks like in San Francisco and what a "Victorian" (built in 2006) for the same price looks like in Dayton, Ohio, the most undervalued city. The San Francisco house is a bit shabby and sparse, but with actual Victorian-era details, and the Dayton McMansion has a huge lawn and a seriously kick-ass, Gaston from Beauty and the Beast –esqe fireplace. Sure, the upside for Dayton’s real estate is that people can afford ginormous houses like that. The downside, though, is that you have to live in Ohio.
Photo courtesy of Flickr user Alberto Carrasco Casado