Despite a cool-off in home prices, more markets are overpriced than ever, according to a new survey. Higher interest rates, especially for adjustable-rate mortgages (ARMs), helped push some housing markets into the overpriced category last quarter, according to Jeannine Cataldi, an economist with Global Insight, which conducted the analysis with National City.

Though rates have declined since the end of the second quarter, the 30-year fixed rate is still at 6.4 percent versus 5.8 percent a year ago. The difference for ARMs is even bigger. The survey also takes into account differences in population density, relative income levels and historical valuations. Markets with premiums above 34 percent of “fair value” were deemed at risk for price corrections. “Price growth will have to be stagnant while income and employment rises for housing valuations to fall,” said Cataldi. Despite a substantial cooling of real estate markets, home prices were still 10.6 percent higher nationwide than a year ago, according to the Office of Federal Housing Enterprise Oversight.

For more information on this and other real estate matters, your first source for Palm Beach real estate should be licensed agent and long-time resident Caesar Parisi.

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