Is There a Real Estate Bubble in Wyoming?
Are we facing a real estate bubble in Wyoming? A bubble in any market whether stocks, bonds, commodities, or real estate is when the value is higher than the actual worth and the price is continually increasing. As with any bubble it is only temporary and could burst. Nationwide we had a real estate bubble back in 2006-2007. The market found its bottom in 2012. When talking about real estate, it is import to know that each market is hyper local. So what happens in New York is completely different than what happens in Wyoming.
WalletHub.com published a report evaluating cities whose mortgages are overvalued. The picture in Wyoming was not pretty, and the worst part is the data was based from TransUnion numbers in September of 2015. That means all the bad news about oil company layoffs has not been factored into the market. Overall the numbers say that houses in the 6 Wyoming cities listed are overvalued.
Not only are property values at the mercy of the national economy and local housing markets, but our financial circumstances can also take an unexpectedly downward turn at any moment. And without a financial safety net, we risk biting off more than we can chew as well as reshaping our long-term goals into short-term realities. – Richie Bernardo of WalletHub wrote.
PLEASE – if you are concerned about these numbers, consult your financial advisor. The value of your house and your situation are unique to you.
The report took into consideration the average mortgage debt, the median house value, the median income, the debt to income ratio, and the debt to household value ratio. Let’s take a moment and break each of these down.
In Casper the average mortgage debt is around $176K and in Cheyenne it is $169K. The median house value in Casper is $182K and $179K in Cheyenne. That makes the debt to house value ratio 97% in Casper and 95% in Cheyenne. Lenders are looking for the Goldilocks number of 80%. Anything over 100% is considered underwater.
The really scary numbers comes when we take a look at the debt to income ratio. The higher the percentage, the more debt an individual has. Lenders want this ratio to be around 30%. Now the here is where your individual numbers come into play, because you may not be in the median average. That being said the debt to income ratio for Laramie is 1047%. The ratio for Casper is 551% and 519% for Cheyenne. That tells us Wyomingites have more debt than income.
What do all these numbers mean? It paints a bearish picture of the real estate market, but each situation is different. The number state that the prices of homes are higher than the economy can support. This report paints in broad strokes and in real estate the details matter. At best it is a buyers’ market if an individual can find a home that is priced well and they have a good credit rating. If you compare the rest of the country to Wyoming, they are in the same situation we are. I cannot stress enough; if you are concerned consult your realtor or financial advisor.