Research shows Michigan homes may be overvalued

MICHIGAN (WNEM) - Research shows that homes in Michigan may be overvalued due to not taking climate change into consideration.

Home values in 97 percent of U.S. cities are overvalued, and real estate in some of the most overpriced regions could fall by 10 percent over the next few years, according to Moody’s Analytics.

“I think the biggest problem you’re having right now with real estate prices is due to higher interest rates,” said Timothy Nash, an economist at Northwood University.

Just like everything else, the prices of homes skyrocketed after the pandemic. According to research published by the Nature Climate Change Journal, the nation’s housing market could be overvalued by as much as $237 billion due to the unacknowledged risk of flooding due to climate change.

Here in Michigan, it may be overvalued by $1.5 billion.

“People want lower prime; people want better schools and they’re willing to pay for it,” Nash said.

Midland County was among the top five counties listed for overvaluation and dependence on property taxes. Oakland County was also top of the list. Nash said Michigan buyers are aware of the risk to live near the Great Lakes.

“If you’re close to flood plane, you’re going to look at it as a normal thing that people do to live close to a river, a lake, or an ocean. You do that and there are pluses and minuses to it,” he said.

For that reason, he said he disagrees with Midland County being marked as overvalued.

“The main reason why I think real estate in Midland has stayed pretty constant and a very good value by the way is because it’s the people who stay in the community. You have people from around the world that live in Midland, you have good schools, you have low crime; these are all things that make Midland a desirable community to live in,” Nash said.

However, overall, Nash said we are already seeing housing prices start to decline to meet buyer’s income.

Click here to look up your own house or neighborhood’s overvaluation risk.

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