Housing demand and prices in urban centers is growing at a faster pace than the overall market, according to the newest quarterly report from Fitch Ratings.
Since 2000, home prices have grown 50% faster in urban centers than in the surrounding areas, with population growth trends beginning to favor city centers as well. "This demand shift implies that city centers will continue to see growth even where regional prices have been stagnant, such as Atlanta or Chicago," said Stefan Hilts, a director at Fitch.
Meanwhile, in its report for this year's second quarter Fitch said that "national home prices have begun to settle into a period of more consistent and sustainable home price behavior." Year-over-year home prices rose 2.8% as opposed to 8% in the second quarter of the year prior.
Still, the ratings agency reported it views prices as 1.4% overvalued nationally, though it expects that level of overvaluation to be "sustainable," with only 12% of markets — 46 out of 379 analyzed — to be overvalued by more than 10%.
Austin, Texas, led the way at an estimated 20.6% sustainable market value decline — Fitch's measure for overvaluation. San Antonio, Miami, Phoenix and Riverside, Calif., rounded out the top five.
