Boca Raton, Fla., Aug. 01, 2023 (GLOBE NEWSWIRE) -- The Miami metropolitan area is climbing up the list of overvalued housing markets in Florida as demand stays strong and the supply shortage persists in the area, according to researchers at Florida Atlantic University and Florida International University.
Currently, buyers are paying an almost 39 percent premium for the typical home in Miami, placing the area as the 11th most overvalued area in the entire country. Just a year ago, premiums in Miami were among some of the lowest in the list of measured metros in the United States.
The typical home price in Miami reached $458,749 at the end of June.
“South Florida home prices have started to increase over the past few months. It is hard to tell if it is the summer selling season effect, or the reigniting of price growth in the area,” said Ken H. Johnson, real estate economist with Florida Atlantic University. “However, premium scores, the difference between actual average and statistically predicted prices, are remaining stable, suggesting that the rise in prices in the Miami area is probably more seasonally related.”
Florida contains nine of the top 15 most overvalued and steadily rising metro areas in the country, according to the Beracha and Johnson Housing Index. Tampa, where buyers are paying an average 42.56 percent premium for a home, tops the list for Florida metros followed by North Port, 41.93 percent; Cape Coral, 41.66 percent; Lakeland, 40.26 percent; Palm Bay, 39.89 percent; Jacksonville, 38.37 percent; Orlando, 38.18 percent; and Deltona, 38 percent.
Housing prices in Florida are being bracketed by two market forces keeping them stable. Higher mortgage rates, reaching almost 7 percent, are preventing prices from re-escalating, while a limited supply of homes on the market and sustained demand combine to keep prices from falling.
“We have a huge demand coming from an influx of population into Florida, as well as more new households being formed in the state,” said Eli Beracha, Ph.D., of FIU’s Hollo School of Real Estate. “Millennials are forming households at a nearly unprecedented rate creating significant demand for housing.”
Researchers at FAU and FIU rank the 100 most over-valued metro areas in the country each month using available data from Zillow or other providers. The data, going back from January 1996 through the end of this June, measures prices of single-family homes, townhomes, condominiums and co-ops.
The monthly ranking is one of three indices released as part of FAU’s Real Estate Initiative, a collaboration of professors at FAU, FIU, Florida Golf Coast University, and the University of Alabama. The initiative releases monthly data looking at rents, housing prices, and whether the market favors buying or renting, to provide a dynamic look at today’s housing market for the average consumer.
Many metros areas in the country also have seen upticks in premiums as housing markets around the country appear to be stabilizing. Atlanta and Detroit are the two most overvalued markets in the country, with buyers paying a 47.34 percent premium and a 46.08 percent premium on a home, respectively.
Beracha and Johnson both agree that the prospect of a significant crash in prices is unlikely and that this housing market cycle will become known for its prolonged period of unaffordable housing.
Amber Bonefont Florida Atlantic University College of Business 5617579188 abonefont@fau.edu
