Study finds real estate overvaluation across Florida

by | May 31, 2023



  • Housing prices in Florida are significantly overvalued in multiple markets, deviating from historical trends, according to a report published by Florida International University and Florida Atlantic University. 
  • Nine out of the top 14 most overvalued markets in the US are located in Florida, with Tampa ranking third.
  • The overvaluation is driven by high demand and a shortage of available housing units, according to researchers
  • While Florida prices have fallen by less than 5 percent, double-digit declines are common in markets like California.
  • Miami stands out with record-high prices and higher returns for owners compared to cities like San Francisco and Los Angeles.

According to a recent report from Florida Atlantic University and Florida International University, housing prices in Florida are significantly overvalued in multiple markets, with the state as a whole deviating significantly from historical trends.

Nine out of the top 14 most overvalued markets were located in Florida, with Tampa ranking third — behind only Detroit and Atlanta — with a premium of 43.98 percent, while North Port-Bradenton and Cape Coral-Fort Myers rounded out the top five.

Other overvalued markets in Florida include Lakeland, Palm Bay, Jacksonville, Deltona, Orlando, and Miami. Per the report, the overvaluation can be attributed to the high demand for housing in Florida coupled with a shortage of available housing units.

“Florida is so overvalued almost certainly because of the increased demand to live here combined with a shortage of available housing units,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “There are just not enough roofs to go around, given our population and Florida’s stature as a prime destination.”

Florida Atlantic University and Florida International University release monthly rankings of the 100 most overvalued metro areas using publicly available data from the real estate portal Zillow and other similar providers. The latest data shows that while prices have fallen in Florida akin to the rest of the country, the decline has been less than 5 percent. In contrast, double-digit price declines are common in markets like California, according to prior publications of the report.

Miami, however, has not witnessed a price decline and reached a record-high average price of $455,184 at the end of April. The researchers also found that Florida’s housing markets are leading the way in terms of profits for owners. The gross annual returns from ownership range from 5.96 percent in Jacksonville to 7.40 percent in Miami, outperforming cities like San Francisco and Los Angeles.

“With circumstances the way they are in Florida, I expect housing prices and rents will remain high, especially with local annual incomes not able to keep up,” said Eli Beracha of FIU’s Hollo School of Real Estate.

5 Comments

  1. SP

    No kidding…people moving to FL to ‘escape’ their current state of residence.

    Law of Supply and Demand
    Definition –
    The law of supply and demand states that if a product has a high demand and low supply, the price will increase. Conversely, if there is low demand and high supply, the price will decrease. Market equilibrium occurs when demand and supply intersect to create a stable price.

  2. rodthomson

    Do people in universities even understand valuation and markets? This reports say they are “overvalued” because there is more demand than supply. I mean criminy sakes, that’s how market value is determined. They aren’t overvalued. They are properly valued for the market at this moment.

    The way they label their metros is equally dumbfounding. It’s the North Port-Bradenton-Sarasota metro area. But they leave off the primary driver of the higher home costs – Sarasota.

    • dmmorrison

      True enough, but markets often overshoot.

  3. Avrum Stark

    I am not sure this article reflects properly the report by the academics.
    Also, the last paragraph does not make sense. I trust Eli Beracha was misquoted or taken out of context.

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