Perhaps underperforming income growth and rising unemployment would suggest low home prices, but Las Vegas is the most overvalued housing market in the nation, a new report for Fitch Ratings says.

Fitch Ratings Managing Director Grant bailey explained that although Las Vegas’s price to rent remains lower than buying a home and the population is growing, home prices still have overshot economic fundamentals, according to an article by Samantha Sharf for Forbes.

The Forbes shows Las Vegas’s ranking as the most overvalued housing market in the nation can be attributed to the relationship between growing populations, low unemployment rates and technology driven markets.

From the article:

In a sign of the times, five of the five most overvalued places in America are located in the western half of the country. Why? All the overvalued markets show strong fundamentals such as a fast-growing population or low unemployment rate typically associated with hot, tech-driven markets found out west.

 These support some level home price growth. But the momentum has gotten ahead of itself, says Bailey, leading to higher home prices than the underlying economy would suggest. Meanwhile, Fitch sees some cheaper Midwestern markets like Cleveland and Detroit, as well as some pricey but high-earning cities like New York, Boston and Chicago, as undervalued.

The latest Case-Shiller report shows that Las Vegas was among the top three hottest real estate markets in the nation in March, with home prices rising at more than half the national average at 12.4% annually. Annual home price appreciation is faster in only one other market in the U.S. – Seattle, with its increase of 13% in March.

Homeowners living in locations with overvalued markets should be cautious, because although Fitch indicates the markets will return to fair value there is no indication of when exactly, the Forbes article states.

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