Southwest Florida Is the US' Most Overvalued Housing Market
Cape Coral-Fort Myers surpassed Boise as the market selling at the highest premium in a recent study.
The Southwest Florida region is the most overvalued housing market in the US, according to researchers at Florida Atlantic University and Florida International University, with hurricane-ravaged Cape Coral-Fort Myers surpassing Boise as the market selling at the highest premium.
The academic researchers note that at the end of August, buyers in that southwest Florida metro — which was battered by Hurricane Ian in September — are paying an average of 70.43 percent above the area’s long-term pricing trend. Average home prices there are $429,775, but should be selling for $252,176, based on statistical modeling of past sales.
Boise is now number two, with buyers paying a premium of 62.66 percent above the area’s long-term pricing trend, followed by Las Vegas, Palm-Bay-Melbourne, Atlanta, and Lakeland.
“Even with the constant threat of hurricanes, people want to live here in a warm and business-friendly climate,” said Ken Johnson, Ph.D., an economist at FAU. “Several storms hit the state in 2004 and 2005 and more since then, and there was concern existing residents and transplants may choose to go elsewhere, but the state is as popular a destination as ever. People have short memories when it comes to storms.”
Cape Coral also came in #2 in other recent research from Johnson, Shelton Weeks, Ph.D., of Florida Gulf Coast University, and Bennie Waller, Ph.D., of The University of Alabama, which found that renters there are paying well above the long-term rental trend as well as year over year. Miami topped that ranking, with renter there paying 21.98 percent above the long-term rental trend and 21.92 percent more than they did a year ago.
The trio of researchers said then that Hurricane Ian will likely have a short-term effect by forcing rents higher, if only temporarily. But they said that any slowdown in demand along the Atlantic and Gulf coasts not directly impacted by the storm will return “relatively quickly.”
“In the long run, people still will want to live in Florida, increasing demand dramatically,” Johnson said.