As home-price growth has tapered—or, in a few regions, actually reversed—there has been significantly less focus on the out-of-control price appreciation that swept across the country in 2020 – ’21. But that doesn’t mean that some markets aren’t still heavily overinflated, according to researchers at Florida Atlantic University (FAU) and Florida International University (FIU), who found that eight metros (five of them located in Florida) are still more than 50% overvalued.
“We don’t expect home prices to fall sharply [in Florida] because our high rents serve to support current prices,” said Eli Beracha, researcher at FIU’s Hollo School of Real Estate, in a statement. “Florida is a very difficult market to break into now unless you have a professional wage or the proceeds from a home sale in another state.”
Last summer, 19 metros surpassed that 50% overvalued mark—a designation earned by how far their current average home prices skewed from long-term trends. Boise, Idaho (now eighth on the list at 50.83% overvalued) peaked above 70%, but has seen premiums fall significantly.
Other cities in the Mountain West and Sun Belt have also seen their prices return toward long-term trends after previously topping the list. Austin, Texas—once the second-most overvalued city in the country—is now ranked 20 (45.40% overvalued, down from 62.47% in May).
Home prices in Florida cities, along with a couple other southern markets (Charlotte, North Carolina, and Atlanta, Georgia, in particular) have remained resilient, with values continuing to buck the predictions of researcher’s models—further evidence that a downturn affects regions very differently.
While homeowners in these regions are certainly happy, Ken H. Johnson, researcher and economist at FAU’s College of Business, said that the inflated prices also have the effect of keeping new buyers on the sidelines.
“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,” Johnson said in a statement. “Florida’s relatively low incomes should make housing affordability a key issue for a long time.”
Population and inventory shortages are the main things propping up prices, according to Johnson and Beracha. And while some expensive markets like San Francisco, California, might experience steep drops, those areas are not deemed “overvalued” due to how expensive they already are.
Other notable takeaways: the Northeast does not boast a single metro in the top 50 for most overvalued (Buffalo, New York, ranks 51, at a 28.42% premium). The most overvalued Midwest city is Detroit, Michigan, at 47.88% (ranked 12 overall), even though the median home price in Detroit is only $238,433—far below the national median of $357,319, according to Zillow’s price index. Las Vegas, Nevada, is the most overvalued city in the West, at 48.71% (ranked 9).
The full rankings can be found here.
