It's not a surprise to many that home and rent prices in Florida have been rising rapidly. Florida has become so popular a destination for relocators that the Census Bureau just named it as the state with the fastest growth in the nation.
But while it's known that prices in the sunshine state have been sharply increasing, it isn't as well known where (and in which cities) one might see the largest percentage of increases and, therefore, the most overvalued home prices. A new survey may answer this question, as outlined below:
Determining the Most Overvalued Home Prices: Florida Atlantic University's College of Business looked at 100 large metros and used data from the real estate website Zillow to look at home values.
A city was considered "overvalued" if homes in that metro were selling higher than where they should be, based on historical trends. (If one wonders why markets like New York and Seattle don't rank prominently on the list, it's because historically, they have high home prices, whereas some of the others that ranked highly do not.)
Florida Cities Dominate the Top 10 Overpriced Housing Markets: The top 10 of FAU's survey was arguably not all that encouraging to those seeking to buy a home in some Florida markets. Six Florida cities showed up in the top 10, as follows:
Cape Coral, Florida at number 1: The city of canals is overvalued by over 62%, according to FAU's study. The average home price of just over $417,000 should actually be around $257,000, per FAU. Cape Coral is consistently rated as an attractive place to retire.
Deltona, Florida at number 2: This city close to Daytona Beach has homes priced at around a 55% premium so that homes which should cost around $234,000 are selling for over $364,000.
Palm Bay, Florida at number 4: Those who want to buy a home in Florida's largest city on the Space Coast will also pay a premium of about 55%. A home that costs around $235,000 not that long ago will run you about $365,000 today.
Tampa, Florida at number 6: Tampa is one of the larger metros in Florida and it is a business hub that attracts young professionals as well as retirees. Still, either demographic that wants to purchase a home here will pay about 54% more. The house that used to be $252,000 now runs around $388,000. (Tampa is pictured at the top of this article.)
Lakeland, Florida at number 7: This up-and-coming community in Polk County is fast-growing, which may be one reason why its property values are soaring. FAU's survey estimates that Lakeland now asks a premium of around 52% for home seekers. Whereas home prices used to barely break 200,000, they are now well over $300,000. (Lakeland is famous for its swans, as pictured below.)
North Port, Florida, at number 10: North Port, a city with over 95 miles of canals, was the only Florida city on the list which had a premium of under 50%, at around 48%. A house that used to ask around $330,000 is now $490,000.
The Remaining Cities: The cities in the list of the top 10 most overvalued metros that weren't Florida were Atlanta (number 3, Charlotte (number 5,) Boise (number 8,) and Las Vegas (number 9.)
As a Result of Overvalued Home Prices, Affordability May Be A Pressing Issue for a "Long Time:" An economist at FAU says that Florida's high home prices may impact some of the population's ability to own a home.
Ken H. Johnson, a real estate economist in FAU's College of Business, commented:
"It used to be that you didn't need a big salary to afford a home in the Sunshine State, but those days are over because this has become a market mostly for move-up buyers and empty nesters. Florida's relatively low incomes should make housing affordability a key issue for a long time."
Comments / 114