A recent study completed by Florida Atlantic University and Florida International University has everyone in the real estate world buzzing. The results are in, and Florida is still at the top for overvalued metros where it has dominated for months. 

But what does that mean for you? Let’s get into the details of these rankings and what experts are predicting based on these statistics.

Out of the top 15 most overvalued and rising metros in the U.S., the study done by the Beracha and Johnson Housing Index shows nine of those areas are in Florida.

Beracha and Johnson Housing Index Rankings

Southwest Florida is the 11th most overvalued area within the entire United States, and according to industry experts,that is unlikely to change anytime soon. In order for an area to be called overvalued, property prices are considered significantly higher than the market would usually require. And these prices are above and beyond what they were even a few years ago.

Housing prices have changed dramatically over the past few years. As the market is beginning to stabilize, there are many places in the United States where the cost of a home is far above what it would normally be valued.

Out of the top 15 most overvalued and rising metros in the U.S., the study done by the Beracha and Johnson Housing Index shows nine of those areas are in Florida. Below, you’ll find a quick summary of the nine Florida metro areas that ranked at the top of the study along with their percentage above premium home price:

1. Tampa, 42.56%
2. North Port, 41.93%
3. Cape Coral, 41.66%
4. Lakeland, 40.26%
5. Palm Bay, 39.89%
6. Miami, 38.89%
7. Jacksonville, 38.37%
8. Orlando, 38.18%
9. Deltona, 38%

Other locations in the top 15 include Atlanta, GA; Detroit, MI; Memphis, TN; Charlotte, NC; Greensboro, NC; and Winston, NC.

The Miami home price, one of the midpoints on this list, soared to $458,749 by the end of June.

While some experts may claim the rise in prices in the Miami metro is linked to seasonal industry fluctuation, Miami and eight other Florida metros have been on this list consistently since May 2023, and experts noted their overvaluation long before then, even in 2022.

With mortgage rates reaching almost 7% and the continued lack of supply, these homes are only there for those who can afford them.

Florida’s Rise to the Top

While there is no conclusive evidence as to the cause of this rise, there are many indicators. With increases in people moving to Florida over the past few years, demand has continued to stay strong while housing shortages have persisted.

Industry experts predict the continued influx of people, which means demand is going nowhere while the supply continues struggling to catch up. Another factor to consider is income. Beracha and Johnson agree that unaffordable housing is a result of these rising costs. Is the unaffordable cost of housing linked to the recent rise in foreclosures? Possibly; however, there will continue to be periods of foreclosures rising and falling in any market cycle, and as you will find out in the linked article, this foreclosure increase is not by a historically large margin.

The reality is that some living in the Sunshine State can no longer afford these soaring housing costs, although, there are still plenty who can. 

There are many luxury estates and homes in Florida that provide the perfect sun-soaked lifestyle that people want. More importantly, there are still those who can afford to live in some of the most expensive neighborhoods in the country. 

Market Stabilizing Forces

Keep in mind that although these prices are higher than we’ve ever seen, they are not necessarily a portent of collapse or crash. In fact, higher mortgage rates and a limited supply of homes on the market are both working to keep prices stabilized. 

With mortgage rates reaching almost 7% and the continued lack of supply, these homes are only there for those who can afford them.

It’s not called the Sunshine State for nothing.

Why People Are Moving to Florida

There are reasons behind every move; however, it appears Florida fits the bill more than most these days. In 2021, over 8 million people moved from one state to another in the U.S. Florida was where the majority of these people chose to go. Why?

It’s not called the Sunshine State for nothing. Having weathered the winter in Ohio and Colorado, I’ve met many people who left their homes behind to go someplace warmer. For many, that’s Florida.

There are also opportunities to be outside all year round whether you want to play a sport or go to the beach. Meanwhile in northern states, shoveling your car out of the ice and snow in December is practically an Olympic sport. 

The multiculturalism you can experience from craft beer to local museums and festivals has also drawn many new residents. On top of that, the tax benefits are appealing to some as they consider their financial future. And even though housing prices are soaring to reflect this desirability, the cost of living is still lower than in other cultural hubs in the United States, such as New York and Massachusetts.

As an investor who has witnessed the anomalous markets in Colorado, my two cents are “don’t wait.”

What This Means for Investors

You may wonder what this means for you. No matter whether you’re a first-time investor, a seasoned owner of multiple properties, or hoping to buy your first investment in years to come, Florida remains a desirable place to be.

Having lived in several housing markets across the U.S. myself, I’ve seen prices soar to their height in the Midwest during the pandemic and continue to soar long afterward in Colorado. 

There are some places in this country people will always want to live, and Florida is one of them. However you plan to finance your next investment, these metro areas remain at the top of the list for places to live. 

As an investor who has witnessed the anomalous markets in Colorado, my two cents are “don’t wait.” With these prices holding steady and continuing to rise, you can’t expect to wait for prices to fall because odds are they won’t.

Don’t Forget Insurance

While you’re making your investment plan for 2023 and 2024, keep in mind where you will get insurance. Even though these markets are stable and thriving, many insurance companies are pulling out of Florida and other states due to the rise in natural disasters. 

Ensure you are prepared and well-planned for the years to come with an adaptable and diverse portfolio ready to weather the storms both in the market and outside your doorstep.