FAU: South Florida homes much less overvalued than other places as we near ‘peak’ prices

(As originally published with bells and whistles, Tue, May 31st 2022, 4:05 PM EDT)

BOCA RATON, Fla. (CBS12) — It’s no secret homes are overvalued and people looking for a place to live are often disappointed, but it may be surprising that South Florida’s real estate isn’t as overpriced as dozens of other places around the country.

Tuesday, Florida Atlantic University and Florida International University came out with a study that shows despite how many people feel, South Florida is not the epicenter of everything that’s out of whack.

According to the FAU-FIU researchers, four housing markets are overvalued by more than 60 percent, while 11 others are overvalued by more than 50 percent.

South Florida is not among those places. Not even close.

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The researchers found Boise leads the nation in overpriced housing. Idaho’s capital had been a distant outpost, far from big-city jobs, but people discovered the area while working remotely during the Covid pandemic. The researchers say with Boise’s pricing history, home prices should now average of $299,202 but the typical buyer is paying $516,548. That’s a whopping 72.64 percent above the area’s long-term pricing trend.

Austin, Texas, ranks #2. It’s said to be quickly gaining ground, with buyers paying 67.7 percent more than they should.

Ogden, Utah (64.73 percent) and Las Vegas (61.48 percent) round out the top 4, and also the housing markets where people are paying more than 60 percent premiums to live.

Prices were skyrocketing for South Florida real estate, May 2022. (Lenny Cohen, WPEC)

The most overpriced place in Florida is the Fort Myers area, and that doesn’t make the list until #8. It used to be a vacation and retirement haven but it’s now 56.26 percent overvalued and “synonymous with unaffordable housing,” as the authors stated.

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At this point, other Florida cities start hitting the rankings:

  • Lakeland came out at #12 and 53.22 percent overvalued
  • Tampa follows at #13 and 52.41 percent
  • North Port-Sarasota-Bradenton is #17 and 48.92 percent
  • Melbourne is #19 and 47.71 percent
  • Daytona Beach is #21 and 46.27 percent
  • Orlando is #25 and 43.04 percent
  • Jacksonville is #28 and 41.85 percent

From there, no Florida cities make the list until Miami-Fort Lauderdale much lower at #49, and 29.84 percent overvalued, and that’s it for Florida in the top 100.

For trend purposes, at the beginning of April, the Miami-Fort Lauderdale market was just 27.01 percent overvalued. Then, during April, the average Zillow Home Value Index price jumped by more than $10,000, from $419,392 to $430,068. But the expected price only went up by $1,000, from $330,211 to $331,220.9.

And as temperatures rise, price hikes are forecast to cool off.

“Near-record-low mortgage rates helped fuel demand for housing, especially during the pandemic, and the competition for homes pushed prices higher. But now the Federal Reserve is raising rates to curtail inflation, and already that’s cooling demand,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business.

He added, that could help people priced out of the market get into homes but hurt others who recently bought.

“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.”

Of course, the rankings don’t consider how expensive a market traditionally is. The researchers explain, New York and San Francisco are extremely expensive but among the least overvalued since they’re selling relatively close to where they should be, based on historical trends.

The researchers’ data dates back to 1996 and covers single-family homes, townhomes, condominiums and co-ops.

Click here for the complete list and analysis of overvalued housing markets.

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