Home Prices Are Overvalued but Will Decline Only Gradually
Abstract: The surge in home prices since the start of the pandemic and the sharp increase in interest rates during 2022 have made purchasing a home much less affordable. Homeownership costs relative to rents suggest home prices are considerably overvalued. However, relief is unlikely in the near future: owners have an incentive to remain in their current homes until rates decrease, mitigating downward pressure on prices.
File format is application/pdf
Description: Full Text
Provider: Federal Reserve Bank of Kansas City
Part of Series: Economic Bulletin
Publication Date: 2023-02-17
Issue: February 17, 2023