Report: Florida has five of the top 10 most overvalued metro real estate markets

Florida has some of the most overpriced real estate in the U.S., and new research shows that out of the top 10 most overvalued metropolitan areas, five of them are in the Sunshine State.

The Real Estate Initiative at Florida Atlantic University was created to measure the impacts across a range of issues in the real estate market like sale and rent prices, and is a collaboration between FAU, Florida International University, Florida Gulf Coast University, and the University of Alabama.

Published monthly, the initiative uses publicly available data and online real estate websites like Zillow to investigate rents and property prices in the country’s largest metropolitans.

The initiative also measures price-to-rent ratios, and data shows that the higher an area’s price-to-rent ratio is, the more likely it is that people will rent over owning their own homes.

Of the top 100 U.S. housing markets, Cape Coral ranks second, next to Atlanta. Lakeland ranks sixth, Palm Bay is seventh, Deltona is eighth, and Tampa is ninth. Northport was one spot out of the top 10.

According to the initiative, home prices in Cape Coral are overvalued by 47.22%, while Lakeland, Palm Bay, Deltona, and Tampa have home prices overvalued by around 41%.

Data shows that renters are also paying more than the average in Florida — with Cape Coral once again being one of the most overvalued places. Cape Coral-Fort Myers managed to have the largest year-over-year rent increases in the nation after an increase of 13.59% in February.

Rent prices, however, are expected to slow down in Florida over time.

The state’s largest metro, Miami, is ranked on the list at 27th, with homes valued at 33.80% over what their worth and the study also showed that rent in Miami is 12.14% higher than the median.

In February, Cape Coral homes were listed on the real estate website Zillow with an asking price of $371,900. However, the expected sale price was much lower at $252,608.8, and only ten years ago, homes were listed for around $140,000 and were selling $50,000 above the asking price.

Tampa, which is currently overvalued by 41.30 percent, was a lot less only three years ago. Before the COVID-19 pandemic, Tampa’s real estate was selling at a 1.55 percent markup, sharply spiking upwards only a few months later.

Ken H. Johnson, an economist in FAU’s College of Business, told The Center Square that rents and sales prices are following trends similar to what was seen prior to the global financial crisis of 2008.

"Currently, four of the Top 10 housing markets in the US (in terms of a premium) are in Florida. All of which are at least at a 40% premium or higher. This is very high but not as great of a departure from the long-term pricing trend that was seen circa 2007." Johnson said.