红玫瑰社区 Housing Markets Overpriced as Buyers Stay Busy During Pandemic
Housing markets in eight of 10 key metropolitan areas of 红玫瑰社区 are overpriced relative to their long-term pricing trends as home values continue to climb in much of the state despite the uncertainty created by the coronavirus crisis, say researchers at 红玫瑰社区 Atlantic and 红玫瑰社区 International universities.
The researchers, the degree of overpricing or underpricing relative to their long-term trends with scores between 1 (overpriced) and -1 (underpriced), found that Miami, Orlando, Tampa, Sarasota, Melbourne, Fort Myers, Port St. Lucie and Lakeland are significantly overpriced compared to their historical values. These markets appear to be approaching their respective peaks as indicated by their scores near 1 on the researchers鈥 scale.
Meanwhile, consumers looking to buy in the Sunshine State may want to head to Daytona Beach and Jacksonville. Those two markets posted scores of slightly below zero, an indication that prices show little sign of deviating from their long-term trends and have a low likelihood of posting near-term declines. In fact, homes in Jacksonville appear to be undervalued, according to economist , Ph.D., and , D.B.A., both of FAU鈥檚 , and , Ph.D., of FIU.
鈥淗ousing markets hate uncertainty and unpredictability, and that鈥檚 exactly what we have to deal with during COVID-19,鈥 Johnson said. 鈥淏ut even with that, consumers are willing to take a chance because interest rates are at historic lows. Sales are brisk and inventory is not keeping pace, so we鈥檙e seeing prices stay elevated.鈥
But Johnson and other analysts say prices aren鈥檛 likely to rise indefinitely, given the potential for higher mortgage rates, an extended persistence of COVID-19 and the potential for a pandemic-related mortgage foreclosure crisis.
鈥淲e鈥檝e enjoyed an extended period of home price gains, but I don鈥檛 expect conditions to remain so favorable much longer,鈥 Beracha said. 鈥淗igher mortgage rates would cause buyers to step back and wait, and we could see more foreclosures and bankruptcies from the pandemic. Eventually, pricing will lose momentum.鈥
Johnson, Gravatt and Beracha analyzed data dating to 2014 from multiple sources, including the (FHFA) and . The 10 selected metros were chosen because they all have repeat sales and rental indices. Markets missing one or the other, such as Tallahassee, were excluded from the analysis.
Johnson, Beracha, and FIU professor William Hardin are the authors of the , a quarterly housing analysis of 23 major metro areas nationwide. The index determines whether consumers can build greater wealth in buying a home and building equity or renting the same property and reinvesting the savings that would have been spent on ownership, such as property taxes and maintenance costs.
The showed that renting and reinvesting is the better option across much of the country because home prices are rising faster than rents.
-FAU-
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