While new research from the Real Estate Initiative at Florida Atlantic University (FAU) reveals Atlanta as the country’s most overvalued housing market, the Sunshine State is a hot spot for overvalued markets.
Home to five of the top 10 most overvalued markets, Florida’s Cape Coral-Fort Myers home buyers were paying 47.22% more at the end of February than the long-term pricing trend for the area, a close comparison to Atlanta’s 49.55%.
“Clearly, markets today aren't nearly as overvalued because prices are leveling off, but they still are much higher than what historical trends suggest they should be,” says Ken H. Johnson, Ph.D., an economist in FAU’s College of Business.
“In general, consumers should be careful about buying in the current housing climate. While I don't expect prices to plummet like they did back in 2008 and 2009, people who buy late in this housing cycle could end up waiting years before being able to resell for an acceptable profit."
For the end of February, the average home price in Cape Coral was $371,900 compared with the expected price of $252,608. The price dropped slightly from January, when the average was $375,192, but the expected price rose from $252,082—48.84% more than the long-term pricing trend for the area.
Using publicly available online data, the FAU Real Estate Initiative investigates property prices, rents, and the correlation between rents and prices in the largest metro areas in the nation. Based on historical rental trends, Florida also dominated the most overvalued rental markets for February. The nation’s three largest premiums were in Cape Coral-Fort Myers (15.5%), North Port-Bradenton (12.46%), and Miami (12.4%).
For February, Cape Coral-Fort Myers had the largest year-over-year rent increase in the U.S. at 13.59%, according to FAU Real Estate Initiative data. The average Cape Coral-Fort Myers rent for February was $2,283.51.