REPORT: Parts Of South Florida Could Face Massive Price Correction
BOCA RATON, FL (BocaNewsNow.com) (Source: FAU Advisory) — Broward, Hillsborough, Orange and Leon counties are the most overvalued for housing among seven Florida markets and run the greatest risk of price declines from COVID-19, according to a new analysis by professors at Florida Atlantic and Florida International universities.
Housing prices in these four counties are the most fundamentally overvalued, making them prone to price corrections even in the best of times, said FAU economist Ken H. Johnson, Ph.D., and Eli Beracha, Ph.D., director of FIU’s Hollo School of Real Estate. While Miami-Dade, Palm Beach and Duval counties also are overvalued, they should experience less of an impact from the coronavirus pandemic.
Johnson and Beracha studied six of the most populous counties in Florida as well as Leon County because of its connection to state policymakers. The professors analyzed 10 years of data to determine the fundamental value of housing in those areas. They studied home prices, rental rates, mortgage rates, property maintenance, taxes and other publicly available information to determine the demand for homeownership and the degree of over- or under-valuation.
“In Broward, Hillsborough, Orange and Leon, COVID-19 is like a Category-5 hurricane waiting to hit,” Johnson said. “It’s best to simply let the pandemic pass before trying to buy or sell property. If COVID-19 passes quickly, the impact could be minimal. If it lasts for months, housing markets all over the country, not just in Florida, will see significant retrenchments.”
During the housing collapse of 2006-2011, homes in Florida and other markets nationwide lost half or more of their values. Investors acquiring properties at deep discounts to renovate and resell or rent launched an extended housing boom that was starting to soften even before COVID-19.
Johnson noted that home sales have slowed during the pandemic, with prospective buyers hesitant to tour homes and make offers. At the same time, vacant properties are drawing increased interest and fetching close to market value because buyers can tour those homes without fearing exposure to the coronavirus.
“A possible out for Florida housing markets is that COVID-19 may only expedite the exodus from the Northeast and Midwest to Florida and other warmer and economically friendly states,” Beracha said. “In that case, more people moving to Florida would serve as a tailwind for housing markets in the state.”
Content copyright © 2021 Metro Desk Media, LLC. All Rights Reserved. We vigorously protect our intellectual property and journalistic product. Broadcast stations must credit BocaNewsNow.com on air. Print must refer to BocaNewsNow.com. Online must link to BocaNewsNow.com. We have agreements with several organizations. Contact news (at) bocanewsnow.com.
The Latest From BocaNewsNow.com
- TURNPIKE CRASH UPDATE: Victim Of Fender Bender Killed When Hit Near Glades Road
- Generator Company Reviews: Tell Us About Your Experience In Palm Beach County
- United Way Of Palm Beach County Raises $433K For Non-Profit Workers
- FLORIDA TURNPIKE CLOSED: Critical Crash Northbound Near Glades Road
- HURRICANE CENTER: Keep An Eye On The Wave, Development Possible
- Homeowner Sues Valencia Reserve, Critically Injured
- DONNA KLEIN JEWISH ACADEMY SUED: STUDENT BULLIED, INJURED
- POLICE: Bulldog Named Morty Attacks Golden Retriever In Seven Bridges, Punctures Ear
- HURRICANE CENTER: There’s Another Wave To Watch