NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: U.S. RMBS Sustainable Home Price Report
(Fourth-Quarter 2014 Update)
Texas has vaulted past California and now has the housing markets deemed most overvalued by Fitch Ratings, with falling energy prices likely to pressure home prices, according to the rating agency's latest U.S. Sustainable Home Price report.
After largely skirting the excesses and downsides of the last housing boom, significant recent growth has made Fitch cautious on the Texas housing market. Fundamentals do not appear supportive of current prices and the economy is vulnerable to the energy sector. Overall, Fitch views Texas prices as approximately 11% overvalued, with prices in Houston, Austin, and Dallas each growing by over 20% since 2011. 'The economies in Texas are strong with economic growth outpacing that of national improvement, but these high home price levels may be unsustainable,' said Director Stefan Hilts.
One concern is the recent drop in oil prices, long a primary economic driver of the Texas economy. A strong energy sector has propelled recent economic strength. However, a five-year rebound in oil prices has collapsed of late. Falling by more than a 40%, prices are now in the mid-50s as of this week. That said, 'Texas has an economic resiliency beyond energy that will help offset any significant downward movement in home prices for these markets over the next year,' said Hilts.
Not surprisingly, California remains near the top of the list of most overvalued housing markets in the country. Perpetually in flux, California home prices continue to the most volatile in the nation. Additionally, growth of over 25% since 2012 has left many of the major markets amongst the most overvalued in the country. Like national values, California growth has significantly slowed during the year, though Fitch does not see a significant correction as likely.
Fitch's 'U.S. Sustainable Home Price Report - December 2014' is available at 'www.fitchratings.com' or by clicking the above link.
Additional information is available at 'www.fitchratings.com'.