Housing Market 2024: 10 Most Overpriced Housing Markets in California
After spiking tremendously from the pandemic, housing prices have slowed their stratospheric growth over the past few years. However, homes in many country areas still remain at elevated prices. This is particularly true in a state like California, which typically has some of America’s most expensive real estate. But even with California’s elevated standards, certain markets are still extremely overpriced, according to data from Zillow and other providers analyzed by Florida Atlantic University’s College of Business. Researchers there created a proprietary methodology to see how much of a premium or discount home buyers were getting in each of the top 100 housing markets in the United States at current levels.
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Based on this analysis, here are the 10 most overpriced housing markets in California, ranked in reverse order.
San Jose
Average listing price: $1,614,185
Expected home value: $1,421,116
Premium: 13.59%
San Jose is at the very heart of Silicon Valley, and it has always been a pricey address. Thus, it’s in no way surprising that San Jose appears on a list of overpriced housing markets. But the fact that the city is only ranked #10 – with a premium of just 13% – may be. The average price of a home in San Jose as of Mar. 31 was a lofty $1,614,185, but it’s still in the neighborhood of its similarly high expected price, according to the FAU methodology.
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Los Angeles
Average listing price: $960,594
Expected home value: $843,743
Premium: 13.85%
Like San Jose, Los Angeles is a city that seemingly always has premium-priced homes. Coming out of the pandemic, homes in LA shot up to a premium of nearly 20%, but this has since settled down to a more manageable 13.85%. New reports have indicated that many residents are fleeing Los Angeles due in part to its high costs, and this is likely contributing to the leveling off of the city’s premium pricing.
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Oxnard
Average listing price: $867,274
Expected home value: $749,122
Premium: 15.77%
Oxnard is something of an under-the-radar coastal city in Southern California, 60 miles northwest of Los Angeles and 35 miles south of Santa Barbara. While homes are priced at a premium, the 16% or so they run above their expected value is not all that bad for a beachfront city. Still, since average home prices in Oxnard are more than double the national average, at $867,274, this means homebuyers will be paying a premium of roughly $118,000 over expected values.
Sacramento
Average listing price: $580,804
Expected home value: $497,091
Premium: 16.84%
Homes in the state’s capital are priced about 17% above their expected value of $497,091. As with most cities in California, premiums peaked in the summer of 2022, at about 32% above their expected value in the case of Sacramento. Since then, home prices have actually decreased a bit, helping bring down the premium valuation on a relative basis.
Fresno
Average listing price: $393,138
Expected home value: $321,996
Premium: 22.11%
Fresno is one of many inland California cities that has suffered from an influx of residents driving prices upward. The city many refer to as the capital of the Central Valley has an average home value that’s roughly $71,000 above its expected price, according to the FAU analysis. Home prices were at a discount in Fresno until Sept. 2020, at which point they shot upwards and have remained at a premium.
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Bakersfield
Average listing price: $347,079
Expected home value: $281,257
Premium: 23.40%
Bakersfield is a frequent stopover for travelers on California’s long I-5 corridor, but it’s also home to about 416,000 residents – many of whom are paying a sizable premium for their houses at current prices. Although the average home price remains below the national average, expected home prices are only $281,257, resulting in a lofty premium.
San Diego
Average listing price: $946,976
Expected home value: $764,788
Premium: 23.82%
San Diego has long been one of the most desirable places in the country to live. From its sweeping coastline to its high quality of life to what some deem the best weather in the world, you should expect to pay a pretty penny if you want to live in San Diego. Currently, the city’s 23.82% premium makes it one of the most overpriced locations in the state. Average home prices run roughly $182,000 above their already-lofty expected price of $764,788.
Riverside
Average listing price: $579,859
Expected home value: $465,555
Premium: 24.55%
Part of the reason that inland areas like Riverside have seen jumps in their home prices is that some Californians in pricey coastal areas are looking for cheaper homes and/or more living space. Prices in Riverside soared to a premium of 32.62% as of Jul. 31, 2022, and although they have since settled down a bit, the premium has been expanding again since Apr. 30, 2024.
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Stockton
Average listing price: $540,147
Expected home value: $424,650
Premium: 27.20%
Stockton is another inland city that may not seem like a hot destination but that has nevertheless seen an influx of bargain hunters when it comes to the cost of living. According to Norada Real Estate Investments, Stockton also suffers from a severe housing shortage, helping to push prices higher than expected. The average home in Stockton now sells for $540,147, well above the national average and $115,000 above its expected price.
Modesto
Average listing price: $464,077
Expected home value: $351,615
Premium: 31.98%
Modesto tops out as the single most overpriced housing market in all of California. Homes there are currently overpriced by a whopping 32%. California residents – and others – looking for a more affordable cost of living have flooded markets like Modesto, which offers average monthly costs only 13% above the national average. Living costs in pricey San Jose, by way of comparison, are at a steep 75% premium.
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This article originally appeared on GOBankingRates.com: Housing Market 2024: 10 Most Overpriced Housing Markets in California
