Charlotte County Florida Weekly

Fort Myers 3rd-most overvalued Florida housing market




 

 

Fort Myers ranks as the third-most overvalued housing market in Florida, behind Lakeland in first and Tampa in second, according to a study from Florida Atlantic University and Florida International University.

North Port-Sarasota-Bradenton ranks fourth behind Fort Myers in Florida at 34.5%.

The study looked at housing markets across the country and found that Florida and Ohio top the nation’s most overvalued markets.

FAU’s Ken H. Johnson, Ph.D., and FIU’s Eli Beracha, Ph.D., rank the most overvalued housing markets of America’s 100 largest metros monthly.

According to their study, Lakeland and Tampa are both currently at more than 40% above historic home pricing — the Fort Myers market is 39.2% above.

“If you’re buying a home in these metros across Florida, Ohio and other areas, it’s imperative that you know you’re buying close to the peak of the market,” said Mr. Johnson, an economist for FAU Executive Education within the College of Business. “The danger is that prices will soon level off or even decline, and you’ll be stuck in that home for a significant amount of time before you can sell it at a profit that makes financial sense.”

According to the study, Lakeland is currently the most overvalued housing market in the state. The study said buyers are paying 42.54% more for homes than they should be. Tampa follows in the second, with buyers paying 41.46% more.

The nation’s most overvalued market remains Boise, Idaho, where buyers pay about 77% more than they should, based on past pricing trends. Austin, Texas, is second, with buyers paying a premium of about 60%.

Utah has three metros in the Top 10: Ogden (3), Provo (5) and Salt Lake City (9).

A recent rise in mortgage rates will soon affect the U.S. housing market, and metro areas with low housing inventories and expectations of future population growth are positioned to withstand the looming real estate slowdown, the researchers said.

For instance, Miami, the least overvalued market in Florida at about 21%, has relatively low housing inventory levels and a steady influx of new residents, likely helping Florida’s largest metro weather pricing slowdowns.

Madison, Wisconsin; Oklahoma City, Oklahoma; and Richmond, Virginia are other areas where prices could level off rather than drop sharply, according to the researchers.

However, markets with limited prospects for future growth could face more di cult downturns in the face of rising mortgage rates. Those areas include Detroit; Memphis, Tennessee; and Dayton and Youngstown, Ohio.

“Mortgage rates have been near historic lows for the last two years and have helped keep housing demand strong through the pandemic,” said Mr. Beracha, of FIU’s Hollo School of Real Estate. “Now we’re seeing rates rise, and that’s going to take some buyers out of the market and curtail price gains. Areas like Miami are better equipped than others to withstand the hit.”

New York and San Francisco, two traditionally expensive housing markets, are among the nation’s least overvalued, according to the researchers’ rankings.

“Buyers in some cities have seemingly learned from past mistakes,” Mr. Johnson said. “It is as if they have refused to be tricked into believing that housing prices only grow to the sky a second time around.”

The researchers use publicly available data from the online real estate portal Zillow or other providers. The data, which extends from January 1996 through December 2021, covers single family homes, townhomes, condominiums and co-ops.

For the complete list, see business.fau.edu/executive-education/housing-market-ranking/housing-top-100/index.php. ¦

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