MoneyReal Estate News


'This trend does concern me': South Florida housing prices grow despite slowing rents, study finds

'While I do not anticipate a major crash, the area could be in for a prolonged period of home price stagnation,' FAU's Ken Johnson says
House, townhome, Florida homes
Posted at 12:51 PM, Apr 29, 2024

BOCA RATON, Fla. — A study released Monday by two South Florida universities found that housing premiums in the Miami metropolitan area increased again despite rising interest rates.

Researchers at Florida Atlantic University and Florida International University called the findings "a potential worrying sign for the housing market."

According to March data from the Top 100 U.S. housing markets, the study said a typical home in South Florida is 34.7% overvalued compared to its long-term pricing trend. This figure is up 15 points from the month before.

"This trend does concern me as prices are still going up in the Miami metropolitan area, but not in the rest of the measured areas in Florida," FAU real estate economist Ken Johnson said in a statement. "Price growth should be tepid considering the slowdown in rents and rising interest rates, but South Florida prices continue to rise despite these market forces."

Real Estate News

Could you afford your home if you were buying it today?

Jessica Bruno
4:59 PM, Apr 24, 2024

Johnson explained why the findings are concerning for the real estate market.

"South Florida's rise in premiums suggests there is a dynamic on the supply side of the market specific to the local market that has yet to be addressed. We want property prices for an area to closely track the area's long-term property pricing trend," Johnson said. "This allows purchases today to be worth more soon without worrying about home prices violently swinging above and below the trend. This is a key factor in ensuring the American dream of homeownership. Unfortunately, this has not happened for the last two cycles in South Florida."

However, researchers said other metropolitan areas in Florida showed positive housing signs.

Measured against the previous month's data, Cape Coral posted a 63-basis point decline in premium; North Port, a 48-basis point decline; Deltona, a 32-basis point decline; Lakeland, a seven-basis point decline; and Tampa, a four-basis point decline.

Real Estate News

Here's where South Florida falls on list of areas that require $100,000 for rent

Jessica Bruno
6:41 PM, Apr 17, 2024

"As prices slowly make their way back to normal, it is a tossup between renting and reinvesting monies that would have otherwise been put into ownership and buying a home and building equity in terms of wealth creation," FIU researcher Eli Beracha said.

Johnson disagreed slightly with this assessment.

"It bothers me that home prices continue to increase despite slowing rents and rising mortgage rates," Johnson said. "While I do not anticipate a major crash, the area could be in for a prolonged period of home price stagnation, making it slightly better to rent and reinvest at this point."

The study said that both researchers agreed that the days of rapid property price appreciation will end sooner rather than later.