According to some economists and market experts, in South Florida, the sharp rise in housing prices recently registered might be costly, in the truest sense of the word, in the near future.
Uncontrolled and excessively high rates of price growth force analysts to talk about the approach of some kind of "retribution" through market and price adjustments. It may turn out to be a catastrophic event for a lot of people.
Dr. Ken Johnson, Assistant Dean for the Graduate Programme at Florida Atlantic University, is among those analysts. His area of expertise includes US market research and monitoring real estate rental rates and housing prices.
According to K. Johnson, 15 US real estate markets show an overvaluation of housing units by more than 50%. In South Florida, this figure is 29.84%. There was extensive growth of rental rates and property prices last year. It quickly exceeded healthy growth rates.
At the moment, overpriced real estate has become a serious problem for a huge number of buyers. Florida is right in the middle of it.
Johnson is quick to warn that "retribution" is not about a massive housing market failure. It is about a major price correction. This will cause serious damage to people who have already bought housing, and to sellers. At the same time, it will make real property available to a wide range of buyers for a sufficient period of time.
But at the moment, the market is still overheated and remains unavailable for a great number of people for a fairly long time.
He explains that one of the main sources of the problem in Florida is the increasing number of out-of-state buyers. And these buyers are interested in Palm Beach County in particular. Renting is popular in Palm Beach, Broward, and Miami-Dade counties.
Based on monitoring observation data, these counties show the highest real estate overvaluation in the market. On his part, Dr. Johnson points out that the situation must be brought under control as soon as possible. At least until the moment when the state's dwelling stock is replenished with a sufficient number of real estate units. However, it may take about 4 years to solve the problem in this way at best.