What’s the most overpriced housing market in Florida?
A new study released Wednesday by Florida Atlantic University and Florida International University researchers shows that although housing prices in the Miami metropolitan area continue to increase, it is far from the most overpriced part of Florida.
The monthly report concluded single-family home and condominium prices in the Miami-area in November were almost 20% above where they should be, compared to almost 3% a year ago. That’s based mainly on housing data from online real estate portal Zillow from January 1996 through the end of November 2021.
While home prices keep inflating in the Miami metro area, which for this report covers Miami-Dade, Broward and Palm Beach counties, it remains the least overvalued housing market among Florida metro areas.
The median price to buy single-family homes in Miami-Dade County in November 2021 jumped to $502,750, up 11% from $450,000 a year ago, according to the latest housing data released in late December by the Miami Association of Realtors. The median price of condos soared 28% to $346,000 from $270,000 in November 2020.
“People often complain about Miami home prices, which are certainly no bargain,” said Ken Johnson, an economist at FAU’s College of Business. “But compared to the rest of the state, Miami is noticeably less overvalued. That should give South Florida buyers some measure of comfort in a competitive market that frequently requires offers over (home) list price.”
Lakeland and Tampa areas have the most inflated home prices, according to Wednesday’s report. Lakeland homes were overvalued by 40.6% percent in November, up from 37.2% in October, while Tampa-area homes stood at just under 40% percent overpriced, compared with 37.4% in October.
In November 2020, both those markets were overvalued by less than 15%.
While residents want their home values to appreciate, Johnson said, that only can happen to a certain extent before housing becomes less accessible to existing residents.
He recommended consumers keep renting until they find the home that best suits them and reinvest the money that would have gone into buying a home, which can lessen the demand for housing and help steady the imbalanced South Florida housing market.
The FAU economist said people buying homes in this frenzied housing market need to negotiate aggressively.
Last month, Johnson said he expected more South Florida homeowners to continue holding onto properties they would have already sold in a balanced housing market. Because of the tight supply, they are opting not to participate in this booming regional housing cycle.
Looking ahead, he expects area housing prices to eventually jump to being 80% above where they should be according to historical averages — similar to the height of the Miami housing boom in the early 2000s.
Each month, the FAU and FIU researchers rank the most overvalued of the nation’s top 100 housing markets, showing where prices are now compared to where they should be based on historical trends.
Nationally, the November analysis revealed homes are overvalued in 98 of those markets, with only Honolulu and Baltimore offering bargains to buyers. Boise remains the nation’s most overvalued market, with buyers paying 78.4% more than they should in November 2021, but that’s down from 79.2% the previous month. Overall, housing prices in metro areas out West appear to be cooling.
This stands in contrast to the eastern part of the U.S., where home prices continue to escalate. Areas such as Miami, Tampa, Fort Myers, Atlanta and Charlotte are experiencing an upward pricing trend.
“Why varying results are developing between housing markets in the West and East is unclear at this time,” said Eli Beracha, of FIU’s Hollo School of Real Estate. “What is clear, however, is that this pattern is taking hold.”
This story was originally published January 6, 2022 at 6:00 AM with the headline "What’s the most overpriced housing market in Florida?."
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