The Antiplanner grew up in the Rose City Park neighborhood of Portland, Oregon, zip code 97213, so it is with some pride that I read that Forbes magazine has declared 97213 to be one of the 10 most overpriced zip codes in the U.S. Forbes considers housing overpriced when the monthly mortgage you would have to pay to buy a house is significantly more than the rent for that house. Since few houses are for sale and for rent at the same time, as a proxy, Forbes divides the median home price by the median annual rent on homes with the same number of bedrooms in a zip code.
Frankly, this is just another effort by Forbes to get you to watch one of their advertisement-laden slide shows. So, to save you the time, here are the magazine’s rankings of the 10 most overpriced zip codes:
. Neighborhood City Zip P:R . TriBeCa New York 10013 36.3 . Chinatown Boston 02111 30.5 . Downtown Seattle 98104 30.3 . West Hollywood Los Angeles 90038 30.2 . Mission Hills San Diego 92103 30.0 . Outer Sunset San Francisco 94122 28.5 . Coronado Phoenix 85006 27.1 . Greenway Parks Dallas 75209 26.7 . Rose City Park Portland 97213 26.6 . Willow Glen San Jose 95125 26.1
In other words, a house in TriBeCa will cost you 36 times the annual rent you would expect to pay for a rental home in the same zip code. Forbes only looked at the nation’s 40 largest cities, so suburbs and smaller cities are not included.
Most of the cities on the list are overpriced due to land-use regulation, but Dallas? Dallas doesn’t have much regulation. Why would it be so overpriced?
As some of the comments on the Forbes article point out, few of these zip codes are homogenous. In other words, the quality of the average 3-bedroom home for sale may be much higher than the average 3-bedroom rental. Forbes says that, in addition to number of bedrooms, it adjusted for price per square foot. But how do you adjust for price per square foot when that is exactly the indicator — rental vs. sale price per square foot — you are trying to distinguish?
So I don’t put much faith in the Forbes article. I suspect a more realistic assessment would find the 10 most overpriced zip codes would almost all be in California, mostly in the San Francisco Bay Area. Still, it is an honor to have my old neighborhood included, and now I must get a note off to my parents, who still live in 97213, telling them to sell while the market is still overpriced.