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Study: Florida's housing market among the nation's most overvalued

Beware of risks in buying close to pricing peak, says FAU economist Ken H. Johnson
Posted at 12:29 PM, Jan 25, 2022
and last updated 2022-01-25 12:47:52-05

BOCA RATON, Fla. — When it comes to metropolitan areas with the nation’s most overpriced homes, Florida and Ohio are leading the pack, according to researchers at Florida Atlantic University and Florida International University.

Among the 33 most inflated U.S. markets at the end of December 2021, seven are from Florida, including No. 12 Lakeland and No. 14 Tampa, both at more than 40 percent above historic pricing, according to FAU's Ken H. Johnson and FIU's Eli Beracha.

“If you’re buying a home in these metros across Florida, Ohio and other areas, it’s imperative that you know you’re buying close to the peak of the market,” said Johnson, an economist for FAU Executive Education within the College of Business. “The danger is that prices will soon level off or even decline, and you’ll be stuck in that home for a significant amount of time before you can sell it at a profit that makes financial sense.”

housing market

A recent rise in mortgage rates will soon affect the U.S. housing market, and metro areas with low housing inventories and expectations of future population growth are positioned to withstand the looming real estate slowdown, the researchers said.

For instance, Miami, the least overvalued market in Florida at about 21 percent, has relatively low housing inventory levels and a steady influx of new residents, likely helping Florida’s largest metro weather pricing slowdowns.

“Mortgage rates have been near historic lows for the last two years and have helped keep housing demand strong through the pandemic,” said Beracha, of FIU’s Hollo School of Real Estate. “Now we’re seeing rates rise, and that’s going to take some buyers out of the market and curtail price gains. Areas like Miami are better equipped than others to withstand the hit.”

Experts expect mortgage rates to remain low for first half of 2021

New York and San Francisco, two traditionally expensive housing markets, are among the nation’s least overvalued, according to the researchers’ rankings.

“Buyers in some cities have seemingly learned from past mistakes,” Johnson said. “It is as if they have refused to be tricked into believing that housing prices only grow to the sky a second time around.”

The researchers use publicly available data from the online real estate portal Zillow or other providers. The data, which extends from January 1996 through December 2021, covers single-family homes, townhomes, condominiums and co-ops.