5 most overvalued housing markets in 2025, according to experts
Something’s gotta give.
Too many Americans are paying far too much of their income to keep a roof over their heads, new data shows — with experts warning things can’t go on like this forever.
In a survey of the country’s most overvalued housing markets, US News & World Report found a number of major cities where mortgage payers in late 2024 could expect to be squeezed to the too damn high tune of 60% or more of the per capita income for the privilege.
And even the less-absurd national median payment ratios are still way up there, pros warn, calling housing nationwide “increasingly unaffordable to the average buyers,” suggesting that “if mortgage rates don’t decline, some home asking prices will eventually have to adjust.”
In 2020, the crunched numbers revealed, the average US homeowner paid about 25% of the per capita income for their mortgage, plus interest.
As of November, that number has jumped to 36%. And don’t get too excited about things being less expensive than they were last year, with things cooling down in recent hotspots like Florida, the insiders urge — that number is still too much.
“While the good news is that income gains, increasing supply and mortgage rates have led to lower income-to-housing costs nationally versus the last quarter of 2023, they’re still significantly higher than in early 2000,” they say.
Translation: Never mind inflation. Even adjusted for that change, far more of your paycheck goes to keeping lenders happy than just a decade and a half ago.
To compile the list of worst offenders, the authors considered anything above the current national average of 36.3% to be “overvalued.”
The information came primarily, they said, from the U.S. News Housing Market Index, “an interactive platform providing a data-driven overview of the housing market nationwide.”
Here, a look at the five craziest markets right now — and no, believe it or not, New York isn’t one of them. It gets worse than the Tri-State’s 47% burden. Way worse.
1. Kahului-Wailuku-Lahaina, Hawaii – 115.4%
Maui, wowie. Even before the 2023 fires that destroyed thousands of homes and displaced 12,000 residents, analysts explained, the Valley Isle had a serious housing shortage.
“On the supply side, a remote location with the added complexities of steep shipping prices and delays for construction materials add to costs, as have geographic limitations to new housing and a limited supply of skilled workers,” the report stated.
“On the demand side, intense competition from not just local buyers but also retirees and investors from out of state, who plan to rent out their homes for passive income.”
The experts noted that for the non-local buyers, the house prices were probably relatively affordable.
Unfortunately for many locals, a home is now essentially out of reach.
2. San Francisco-Oakland-Hayward – 68.3%
San Francisco may not be your cup of clam chowder — but that’s fine, because according to new data, most people can’t afford it. While another set of numbers published last month revealed a double digit drop in average home prices in the region, it’s still far from a bargain.
The report blamed “years of housing supply not keeping up with job growth” for the exorbitant prices paid California-wide, generally speaking — with the Bay tapping in as worst offender.
3. Riverside-San Bernardino-Ontario, California – 67.8%
Sometimes up to two hours from the beach, if not more, many of the towns and cities in Southern California’s Inland Empire sprang to life as affordable bedroom communities for the pricier spots in the region.
Now, median-earning homeowners are shouldering a larger burden than some of their counterparts near the coast, according to the study.
4. San Diego-Carlsbad – 66.3%
A housing shortage and prices rising faster than wages have turned a recently relatively affordable Southern California standby into a place where average income earners are essentially squeezed out of the market.
5. Los Angeles-Long Beach-Anaheim – 66.0%
“The loss of an estimated 12,000 structures in the recent Los Angeles area fires will only exacerbate the high costs for both buyers and renters,” study authors predicted.
