US residential property market is cooling. Is Florida the exception?

US residential property market is cooling. Is Florida the exception?

According to the Florida Atlantic University, house prices in some US cities have finally peaked after two years of continuous growth. Nevertheless, experts forecast that the Florida real estate market will remain strong compared to other parts of the country.

Every month, Ken Johnson from the Florida Atlantic University and Eli Beracha from the Florida International University compare the expected value of residences with their actual value in the country’s largest cities. This is how they determine which cities are the most overpriced.

Tampa became number nine in this rating. The average price of local real estate is 58.5% above the expected price. Fort Myers was the third and Lakeland, the seventh.

The difference between the actual and the expected house value reduced in 27 US metropolitan areas. “This is a sign that places are reaching the top of the cycle and prices are going to start normalizing again now,” Johnson said.

Lei Wedge, Professor at the Muma College of Business, believes that house prices in Tampa have already peaked. She says that statistical models like the one used in research by the Florida Atlantic University often lag behind the events that are actually occurring in the market.

Representatives of Florida real estate agencies are claiming that the rising mortgage rates have indeed helped to cool the market, making it less competitive. Nevertheless, Johnson says that a great inflow of buyers moving from out of the state will prevent the prices in places with a stagnating or reducing population from dropping.

According to the US Census Bureau, the population of Florida grew by 14.6% from 2010 to 2020 but the number of residential units increased by only 9.7%.

Although the current prices may seem too high for many people born and bred in Tampa Bay, the local real estate is still worth much less than properties in comparable cities, such as Atlanta or Dallas. Additionally, there is no income tax in Florida, which makes the Sunshine State an attractive option for remote workers who would like to save money.

Instead of hoping that the prices will suddenly return to the pre-pandemic level, many experts encourage first-time home buyers to study alternative options, such as rent-to-own programs.

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