Overpriced Florida Homes Spark Fears of Market Instability
Florida housing markets remain plagued by rampant overpricing, putting potential buyers at such a disadvantage that they may be better off postponing homeownership, according to researchers at 91制片厂 and Florida International University.
As of May 31, homes across the Sunshine State were selling for a 19.24 percent premium above their long-term pricing trend, an increase from 17.17 percent at the end of April.
Tampa Bay is the most exposed of Florida鈥檚 major metropolitan areas, with homes selling for a 28.53 percent premium, compared with 26.14 percent in April. The degree of overpricing also continues to build in other metro markets across the state since April: Miami (14.88 percent, up from 13.18 percent); Orlando (19.79 percent; 18.45 percent); Jacksonville (20.48 percent; 18.22 percent); and Tallahassee (12.95 percent; 10.48 percent).
鈥淎ccelerating price growth in all these markets is particularly disturbing,鈥 said , Ph.D., a real estate economist and associate dean in 91制片厂鈥檚 . 鈥淲hile I don鈥檛 believe a devastating housing crash is imminent, the greater the premium becomes, the more I get worried about price instability going forward.鈥
The analysis is based on more than 25 years of housing data from聽, the online real estate portal. The data covers single-family homes, condominiums, townhomes and co-ops.聽
Johnson and , Ph.D., of FIU鈥檚 Hollo School of Real Estate, said a shortage of homes for sale, expected population gains and near-record-low mortgage rates likely will keep prices from collapsing. Even so, Florida buyers who pay close to peak prices now may have to wait years before seeing noticeable returns on their investment.
Johnson and Beracha advise potential homebuyers across the state to bargain aggressively and avoid getting into bidding wars. But in a , Johnson said more consumers deciding to rent would help alleviate housing demand and stabilize prices.
The two professors are co-authors of the , a quarterly housing barometer for 23 major metro areas nationwide. The index analyzes whether it is better for wealth creation to buy a home and build equity or rent a similar property and reinvest the money that would otherwise have been spent on ownership.
鈥淥ur index shows you can build significant wealth through renting, often more than buying, as long as you reinvest money that would have gone to ownership,鈥 Beracha said. 鈥淕iven where Florida prices are now, the best way to try and avoid greater exposure to future price instability is for more potential buyers to seriously consider renting and reinvesting at this point. This will curb the demand for ownership and slow down pricing, helping to stabilize the state鈥檚 housing markets.鈥-91制片厂-
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