"Florida is the state where prices are well out of line with historical trends," a news release of the report said.
TAMPA, Fla. — The housing market — we all know about the high prices and high demand dominating the scene for a while now. But what about the value of these homes?
A reportreleased last week by Florida Atlantic University, in partnership with researchers at Florida International University, shows that Florida continues to have housing markets that are "significantly" overvalued, even with prices starting to come down.
Specifically, two Tampa Bay cities rank in the Top 5 and three cities make up the Top 10. That means homebuyers in these housing markets are shelling out more for homes that typically wouldn't cost as much.
While Atlanta, Georgia, and Detroit, Michigan took the No. 1 and 2 spots respectively, Tampa was a relatively close No. 3.
"Florida is the state where prices are well out of line with historical trends," a news release of the report said.
Data show that as of the end of April, Tampa homebuyers are paying an average of $367,956 for a home that typically would be expected to sell for only an average of $255,552. That's nearly a 44% premium — meaning prices are "above the area's long-term pricing trend that buyers must pay."
Right behind Tampa on the list was North Port at No. 4 and Cape Coral/Fort Myers at No. 5. Both cities show premiums of over 43%.
Other overvalued Florida cities include Lakeland, Palm Bay, Jacksonville, Deltona, Orlando and Miami. You can find the full rankings of citieshere.
“Florida is so overvalued almost certainly because of the increased demand to live here combined with a shortage of available housing units,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “There are just not enough roofs to go around, given our population and Florida’s stature as a prime destination.”
Researchers did express concern that despite Florida's housing prices falling similarly to other states across the U.S., many expect housing prices and rents to remain high. High enough to outpace local annual incomes, FIU Dr. Eli Beracha said.
As an expert in real estate economics and housing market trends, I can confidently analyze the information provided in the article and shed light on the key concepts at play.
The news release mentions a report by Florida Atlantic University (FAU) in collaboration with researchers at Florida International University, focusing on the overvaluation of housing markets in Florida. The report reveals that even as housing prices are starting to come down, Florida continues to experience significantly overvalued markets.
One crucial indicator of this overvaluation is the premium that homebuyers in certain Florida cities are paying compared to historical trends. Tampa, for instance, ranks as the third city with a nearly 44% premium, with homebuyers paying an average of $367,956 for a home that would typically be expected to sell for only an average of $255,552. This premium signifies that prices in these markets are above the long-term pricing trend, presenting a concern for prospective buyers.
The overvaluation trend is not exclusive to Tampa; other Florida cities like North Port (No. 4) and Cape Coral/Fort Myers (No. 5) also exhibit premiums of over 43%. The report highlights a total of three Tampa Bay cities in the Top 10 and five in the Top 21 overpriced rental markets in Florida.
An expert economist from FAU, Ken H. Johnson, Ph.D., attributes Florida's overvaluation to the increased demand to live in the state combined with a shortage of available housing units. This imbalance between demand and supply is a fundamental factor driving up prices. Johnson emphasizes that the high demand for living in Florida, coupled with the state's status as a prime destination, has led to a situation where there are not enough housing units to accommodate the population.
Despite the observed decline in housing prices in Florida, the researchers express concern that housing prices and rents are expected to remain high. Dr. Eli Beracha from Florida International University notes that these prices may continue to outpace local annual incomes. This suggests a potential long-term challenge for affordability in the housing market, impacting both homebuyers and renters in the state.
In conclusion, the article discusses the overvaluation of housing markets in Florida, backed by a comprehensive report from FAU and Florida International University. The factors contributing to this overvaluation include increased demand, a shortage of housing units, and the expectation that high prices may persist, posing challenges to affordability for residents in the state.
