In 2025, the U.S. housing market has seen significant overvaluation in several regions, leading to heightened affordability concerns. Notably, mortgage payments in areas like Kahului-Wailuku-Lahaina, Hawaii, have escalated to 115.4% of the average income, indicating a severe affordability crisis. Similarly, in California, regions such as San Francisco-Oakland-Hayward and Riverside-San Bernardino-Ontario have mortgage-to-income ratios exceeding 60%, underscoring the pressing need for policies addressing housing affordability. This list is based on data from Zillow, Business Observer and NYPost, derived from their latest market figures (2025)

1. Kahului-Wailuku-Lahaina, Hawaii

In 2025, the Kahului-Wailuku-Lahaina area in Hawaii has emerged as the most overvalued housing market in the United States. Mortgage payments in this region have soared to 115.4% of the average income, indicating a severe affordability crisis. This overvaluation is primarily driven by limited land availability and high demand for housing in this desirable location.

2. San Francisco-Oakland-Hayward, California

The San Francisco-Oakland-Hayward metropolitan area continues to grapple with escalating housing prices, with mortgage costs consuming 68.3% of the average income. The tech industry’s growth has driven demand, leading to escalating home prices.

3. Boise, Idaho

Boise experienced a housing boom during the pandemic, attracting remote workers seeking affordability and quality of life. However, this surge in demand has led to overvaluation, with home prices outpacing local income growth. The rapid appreciation has raised concerns about sustainability and potential market corrections. In January 2025, Boise reported a 36% year-over-year increase in home showings, indicating continued interest but also potential market saturation.

4. Austin, Texas

Austin’s emergence as a tech hub has spurred significant population growth and housing demand. However, the market is now experiencing price corrections, as affordability challenges mount. In response, the city has implemented policies to increase housing density and streamline permitting processes, leading to a 22% drop in rents since August 2023.

5. Riverside-San Bernardino-Ontario, California

The Riverside-San Bernardino-Ontario area has seen mortgage expenses rise to 67.8% of average income. The spillover effect from pricier neighboring regions has inflated home values beyond sustainable levels.

6. Nashville, Tennessee

Nashville’s housing market has seen a significant surge, with average home values reaching $428,678, marking a 0.9% increase over the past year. This escalation has led to affordability challenges, as potential buyers now need an annual income of approximately $120,000 to afford a median-priced home, while the median household income stands at $91,000. The city’s appeal has driven demand, but the widening gap between home prices and local incomes raises concerns about overvaluation and housing accessibility.

7. Salt Lake City, Utah

Salt Lake City’s housing market has experienced notable growth, with average home values climbing to $549,528, reflecting a 2.4% increase over the past year. Zillow projects Salt Lake City to be the 10th-hottest real estate market in the U.S. for 2025, driven by limited housing inventory and sustained demand. However, this surge has exacerbated affordability issues, as homeownership costs are pricing out many residents, indicating that housing demand is outpacing local income growth.

8. Tampa, Florida

In 2025, Tampa’s housing market is experiencing significant shifts. The region has seen a 23% year-over-year increase in unsold homes, leading to notable price reductions, with some properties experiencing cuts of up to 40%. Factors contributing to this trend include high housing fees, an oversupply of new homes post-pandemic, and frequent natural disasters impacting the area. Despite these challenges, reports suggest that Tampa-St. Petersburg remains a market to watch, ranking fourth among the top 10 markets for 2025, driven by continued population growth and a positive business climate.

9. Las Vegas, Nevada

Las Vegas has seen a significant influx of investor activity, pushing home prices beyond fundamental values. Ranked as the second most overvalued market in the U.S., homes are selling at a 35% premium over their modeled price. This trend raises concerns about market stability, as prices driven by speculative investments may not be sustainable in the long term.

10. Phoenix, Arizona

Phoenix’s housing market remains one of the most overpriced in 2025, with homes selling for 32.58% above their true value. Despite a 4.3% price decline in 2024, the correction hasn’t been enough to align prices with the city’s economic reality. Historically, Phoenix has been a magnet for investors, consistently ranking on overvalued market lists.

This article was created with the assistance of AI but thoroughly edited by a human being.