Homes in South Florida are overpriced when you look at prices relative to what local wages and the economy can support. The does not mean that prices cannot continue to rise. But it does signal caution.
As of the third quarter of 2015, Broward County homes were overvalued by 10 to 15 percent, while Palm Beach County properties were 5 to 10 percent above value. That data comes from Fitch Ratings, a global statistical organization that researches housing markets for investors.
Homes in Miami-Dade County were overvalued by 15 to 20 percent. San Francisco is the most overpriced regions among the largest metro areas nationwide.
During the peak of the last decade’s housing boom, home prices were overvalued in all three South Florida counties by more than 40 percent
Prices hit bottom by early 2012, and have been rising since then
Prices have outpaced wage growth in recent years, sparking concerns about affordability among the middle class. First-time buyers and young families struggle to find housing, particularly newly built homes, where prices often start at $500,000 and above.
In December, the median price for an existing single-family home in both Broward and Palm Beach counties was $305,000, according to local Realtor boards. Miami-Dade’s median price was $279,000.
Rising prices are a good thing, but to much of a good thing can spell trouble ahead.
