ST. LOUIS – Inflation and interest rates are rising to some of their fastest levels in decades, impacting the costs of food, transportation and many essentials of everyday life. When it comes to the housing market, that’s no different.

The costs of homes are rising in the St. Louis region, and in some cases to tens of thousands of dollars higher than traditional value. New data reveals that homes in the St. Louis region are currently overvalued by 21.4%, the area’s highest such mark over the last 15 years.

A joint study from Florida Atlantic University and Florida International University compiled data on 100 US housing markets over several decades. The universities release new findings every month. Research teams use a formula to calculate the expected home price for each market, then compare it to the average Zillow Home Value Index price for the region.

The two numbers compiled for each market represent the actual costs versus expected costs of homes. If buyers are paying more than expected, which is represented by a positive percentage, the market is considered overvalued.

“Near-record-low mortgage rates helped fuel demand for housing, especially during the pandemic, and the competition for homes pushed prices higher,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business, in a news release.

In St. Louis, the expected price of a home is around $196,000 and the average Zillow index is around $239,000. Because the Zillow index is greater than the expected price, that means the homes are generally overvalued and customers are spending above market price for their homes. According to the data, homes in the St. Louis market are valued 21.4% above their actual value, the region’s highest mark since a 22.39% premium/discount rating in July 2006.

The latest findings suggest St. Louis, while pushing a personal record in how much the housing market is overvalued, is in a better position than dozens of U.S. cities. At least four U.S. housing markets are priced more than 60 percent above value and 11 others are overvalued by 50 percent, according to the research teams.

“If we’re not at the peak of the current housing cycle, we’re awfully close,” Johnson said. “Recent buyers in many of these cities may have to endure stagnant or falling home values while the market settles, and that’s not what they want to hear if they had planned to resell anytime soon.”

According to the research, homes in the St. Louis area were last considered undervalued in August 2020, a stretch that lasted nearly 10 years and into the early stages of the COVID-19 pandemic. The Zillow index has increased each of the last 20 months in St. Louis.

The rankings are not a measurement of the traditional expenses of a market. For instance, two of the highest-cost housing markets, New York and San Francisco, are among the least overvalued in the country because homes in those two metros still are selling relatively close to where their homes are valued. The study says the most overvalued market right now is Boise, Idaho, which has homes overvalued by nearly 72% on average.