Bargains Disappear in Overvalued South Florida Housing Market
The average home in Southeast Florida is overvalued by more than 11 percent, the result of continued low mortgage rates and a steady supply of new residents moving to the tri-county region, according to a from 91社区 and Florida International University.
Properties in Palm Beach, Broward and Miami-Dade counties are 11.52 percent above their long-term pricing trend, say researchers who analyzed publicly available data from , the online real estate portal. The analysis covers single-family homes, condominiums, townhomes and co-ops.
鈥淢ortgage rates remain very low compared to historical norms, which helps pricing, and the influx of new residents continues to grow at an astounding pace,鈥 said , Ph.D., an economist in 91社区鈥檚 . 鈥淏oth of these factors support housing prices and help explain the current degree of overpricing in the marketplace. But mortgage rates are on the rise, and rising mortgage rates always act as a headwind for housing prices.鈥
Mortgage giant Freddie Mac said the average 30-year mortgage rate to 3.09 percent, the highest since the week ending June 18. Still, rates remain near historical lows and aren鈥檛 likely to have a noticeable effect on homebuying and prices until sustained increases push rates past 4 percent, the researchers said.
Working with Johnson on the study were 91社区鈥檚 , D.B.A., and , Ph.D., of FIU鈥檚 Hollo School of Real Estate.
The researchers say consumers will find few deals in Palm Beach, Broward and Miami-Dade, with many properties drawing strong interest as soon as they hit the market and selling within days or weeks at or above asking price.
鈥淐learly, we are on the upside of the housing cycle, making 鈥榞reat buys鈥 problematic compared to the recent past,鈥 Beracha said.
The researchers previously collected home price data from the (FHFA), which compiled all transactions across the tri-county area on a quarterly basis. But that data came with a two-month lag and included sales at the lower and higher ends of the market. Sales in those two categories are extremely volatile, making it difficult to determine long-term pricing trends.
The Zillow Home Value Index (ZVHI) allows for monthly analysis with a three-week lag and includes sales only in the 35th to 65th percentile range, which offers a more accurate estimate of local housing trends, according to the researchers.
Johnson and Beracha also are co-authors of the . The quarterly housing analysis of 23 key metropolitan areas determines whether consumers will create wealth faster by buying a home and building equity or renting the same property and reinvesting the money they would otherwise have spent on ownership.-91社区-
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