Sarasota is the 6th most overvalued housing market in FL (Tampa: real estate market, rentals)

[graceC]

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.

“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 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 these economists, this area is 34.50% overvalued.

Here’s the link to the article: https://www.abcactionnews.com/news/p...ousing-markets

For more details from FAU data: https://business.fau.edu/executive-e...sing/index.php

[sulvaterry]

There is something bigger going on... Its been going on and its getting huge...
The pandemic is just the start of mainstreaming it.. The way we work will never be the same.

It will become even bigger as the years go on. Its STAY AT HOME work and schooling... The Technology is there! There is no reason for professionals to commute to bricks and mortar anymore.

So people want to live in warm places and have access to cheap energy and beaches.
Florida will never be the same and Florida will be the most popular.

[blueherons]

Originally Posted by graceC

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.

“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 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 these economists, this area is 34.50% overvalued.

]

I'm glad their crystal balls are working.

[beach43ofus]

All this report is doing is looking at current pricing in relationship to prior pricing. They are plotting price change trends over time.

"Overpriced" just means more than it was before by X %. It doesn't take any of the following into account:

-inflation
-cultural changes such as work from home
-demographic changes such as baby boomers migrating South for retirement
-supply and demand of residential properties (we have very high demand and low supply right now)
-business climate...such as supply chain interruptions pushing prices upward for new homes.
-regional attractiveness

It is backward looking, and has near zero predictive value of future valuations.

Just because prices are escalating rapidly in the past 2-3 years doesn't mean we are over-priced. We may never return to the prices of 2018. Prices could continue to escalate for quite some time. How do you think San Fran and NYC got to $1,000+ppsqft? Our area is still around $300-$400, so comparitively low.

This study is over-simplifying a much more complex marketplace. I suggest ignoring it. The rate of price increases may slow, but real prices are unlikely to fall in 2022 say most Real estate pro's I've read.

Another way to say that is...prices will keep going up, just not as fast as they have been.

[joshan]

Beach nailed it

[City Guy997S]

I met with a new financial planner yesterday. Nice guy, 20 yrs in the industry, over a billion under his management.

He kept referencing the 70's inflation during our meeting. 2 things did great in the 70's (real estate and commodities). Unlike the 08-09 crash (shaky financing, stock market wobble) this time around inflation is going to crush people and their future buying power.

So if you buy the home, it will rise in value because inflation will ensure you can't build that same house again for less money!
Lets say 2000 sq ft, you paid 400K ($200 a square foot). Now today, you buy the lot for $75000, that leaves you $325,000 to build your new home @ $162.50 a square foot. Can't do it today at that price so why would you think you can in 5 more years? Look at the price of lumber, the price of PVC pipe, the price of labor!

You think interest rates kill real estate? Remember in the 80's mortgages were 12%! My parents bought a brand new 4/2/2 car garage concrete block house in 1975 for 44K, 8 years later they sold it for 115K. How could that happen with crazy interest rates? The cost of the house couldn't be duplicated years later. That is what we are in for now.

[City Guy997S]

Originally Posted by beach43ofus

All this report is doing is looking at current pricing in relationship to prior pricing. They are plotting price change trends over time.

Just because prices are escalating rapidly in the past 2-3 years doesn't mean we are over-priced. We may never return to the prices of 2018. Prices could continue to escalate for quite some time.

Another way to say that is...prices will keep going up, just not as fast as they have been.

Bingo!

Also consider the buyers that are sitting on the sidelines waiting for the big drop while their "cash" is getting eaten up by inflation. So the houses keep drifting upwards, then interest rates bump another point and suddenly their downpayment isn't growing at the same rate pushing their dream home further away. So they have to buy a smaller/cheaper home for MORE than they were willing to pay years prior!

[Hbcapital]

Ignore this idiot study. All they did was compare current prices to a long term price trend. Does not take into account demographics or migration. Los Angeles near the bottom in overvaluation? Detroit and Memphis in the top 15? Gimme a break!

[joshan]

When you see Detroit you just close the story.

[Sunshine Rules]

Originally Posted by beach43ofus

All this report is doing is looking at current pricing in relationship to prior pricing. They are plotting price change trends over time.

"Overpriced" just means more than it was before by X %. It doesn't take any of the following into account:

-inflation
-cultural changes such as work from home
-demographic changes such as baby boomers migrating South for retirement
-supply and demand of residential properties (we have very high demand and low supply right now)
-business climate...such as supply chain interruptions pushing prices upward for new homes.
-regional attractiveness

It is backward looking, and has near zero predictive value of future valuations.

Just because prices are escalating rapidly in the past 2-3 years doesn't mean we are over-priced. We may never return to the prices of 2018. Prices could continue to escalate for quite some time. How do you think San Fran and NYC got to $1,000+ppsqft? Our area is still around $300-$400, so comparitively low.

This study is over-simplifying a much more complex marketplace. I suggest ignoring it. The rate of price increases may slow, but real prices are unlikely to fall in 2022 say most Real estate pro's I've read.

Another way to say that is...prices will keep going up, just not as fast as they have been.

Excellent post, double reps. The housing market in Florida is unique from other states and municipalities for many of the reasons already stated in this thread, plus a few others. Comparing the Tampa or Lakeland metro area to Detroit is like comparing apples and pickles. No relation.

The fact remains that, like it or not, more people are wanting to move to our area of FL than are leaving it by large numbers. Prices will continue to increase as long as demand exceeds supply and it may take years before supply catches up to demand. Having to compete with large REITs (real estate investment trusts) that are buying up houses and converting them into rentals, does nothing to help alleviate the supply problems here.

Our area also offers a large number of beautiful public beaches, outdoor activities and a relatively large number of cultural and other activities for the size, adding to the attraction for new residents.

Most FL real estate market "experts" are actually looking for prices to continue to increase at least thru 2023, perhaps further out. They tend to disagree on the percentages of the price increases though. I've seen everything from 6% to 23% for 2022, so quite a huge difference of opinion.