BY: STAFF REPORT | BocaNewsNow.com
BOCA RATON, FL (BocaNewsNow.com) (Copyright © 2021 MetroDesk Media, LLC) — The skyrocketing prices for homes in South Florida may be short lived, according to experts at Florida Atlantic University. Homes in Palm Beach County, Broward County and Miami-Dade are overvalued by more than 11 percent, according to the professors who issued the following media advisory which we are publishing verbatim:
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 report from Florida Atlantic University 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 Zillow, the online real estate portal. The analysis covers single-family homes, condominiums, townhomes and co-ops.
“Mortgage rates remain very low compared to historical norms, which helps pricing, and the influx of new residents continues to grow at an astounding pace,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “Both 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.”
Mortgage giant Freddie Mac said the average 30-year mortgage rate climbed last week to 3.09 percent, the highest since the week ending June 18. Still, rates remain near historical lows and aren’t likely to have a noticeable effect on homebuying and prices until sustained increases push rates past 4 percent, the researchers said.
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.
“Clearly, we are on the upside of the housing cycle, making ‘great buys’ problematic compared to the recent past,” Beracha said.
The researchers previously collected home price data from the Federal Housing Finance Agency (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 Beracha, Hardin & Johnson Buy vs. Rent Index. 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.
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