Los Angeles-Orange counties rank 12th for homebuying bargain, Inland Empire No. 50

”Survey says” looks at various rankings and scorecards judging geographic locations, noting that these grades are best seen as a mix of art and data.

Buzz: Los Angeles and Orange counties offer the 12th best homebuying “bargain” in the nation, by one metric. Inland Empire? No. 50 of the 100 metros studied. 

Source: This is the first of what is promised to be a monthly study of current home pricing in big metropolitan areas vs. historic patterns. Professors at Florida Atlantic University and Florida International University used Zillow data dating to 1996 to measure valuations for single-family homes, townhomes, condominiums and co-ops.

Details

According to this math, residences in the L.A.-O.C. metro sell at a 5.4% “premium,” as researchers called the gap, to their historic value as of July. Only 11 metros had more buyer-friendly pricing on this scorecard.

In Riverside and San Bernardino counties, prices fell to the middle of the pack, with Inland homes calculated to be 20.4% overvalued.

The best housing deal, by this math, was Honolulu, seen as 4.9% undervalued, and then Virginia Beach, 2.5%, Baltimore, 1.7%, New York, 0.8%, and Baton Rouge, 0.4%.

Worst deals? Boise, with eye-catching 81% “premium” pricing; followed by Austin, 51%, Ogden, 50%, Provo, 46% and Detroit, 46%.

How did other California markets fare in this valuation study?

The No. 15 U.S. “bargain” was Ventura County at 7.4% overvalued. Then came …

No. 17 San Francisco: 8% overvalued.

No. 22 San Jose: 11.2% overvalued.

No. 32 San Diego: 14.9% overvalued.

No. 41 Bakersfield: 16.8% overvalued.

No. 45 Fresno: 19.6% overvalued.

No. 60 Sacramento: 23% overvalued.

No. 91 Stockton: 38.5% overvalued.

Caveat

This metric is clearly targeting the estimated investment value in current markets, not any relative “affordability” issues. In fact, financial needs may be a reason low-priced markets such as Boise are so overvalued, the study’s authors noted.

Quotable

Of the most overvalued metros, Ken Johnson, an FAU real estate economist, said: “Potential buyers might want to consider renting and reinvesting money that they otherwise would have put into homeownership. Renting and reinvesting has been shown to often outperform ownership in terms of wealth creation.”

Bottom line

It will be interesting to see how this yardstick performs over time.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com