Naples, Florida Leads Overvalued Home Market Survey
According to the latest Housing Market Analysis conducted by National City Corp, a financial holding company (in conjunction with Global Insight, a financial information provider), sixty-five of the nation’s 299 biggest real estate markets are severely overpriced and subject to possible price corrections.
The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost — $180,956 — according to the analysis.
National City arrives at its estimates of what the typical house in these markets should cost by examining the town’s population densities, local interest rates, and income levels. It also factors in historical premiums and discounts for each area.
Other markets deemed wildly overpriced included Merced, California (by 77 percent), Salinas, California (75 percent), and Port St. Lucie, Florida (72 percent). As we’ve documented, there has been a 51% increase in median home prices across the nation since 2000.
Undervalued markets were:
- College Station (-23 percent)
- El Paso (-18 percent)
- Killeen (-16 percent)
These are all located in Texas, a state that dominated the discounted markets list with nine of the 10 most undervalued housing markets. Montgomery, Alabama was No. 8 among the undervalued markets. Therefore, those that are being turned away by the lack of affordable home loans may have to consider the Lone Star State for the best deals.
The data did produce some evidence of prices moderating, according to National City’s chief economist, Richard DeKaser.
In Massachusetts, for example, one of the hottest of housing markets over the past few years, each of the seven housing markets analyzed was still overvalued. Prices, however, had fallen in all seven. That would indicate the state is trending back toward normal valuations.
The same could not be said of Florida. The Sunshine State had 15 different markets on the list of extremely overpriced metro areas and all 15 had grown more overpriced during the quarter.
It should be noted, however, that data - or viewpoints - often vary. Previous reports stated the the Florida home loan market, as well as others around the nation, was actually declining in its home values. While the numbers were the same, it was cast in a positive light because the number of overvalued markets has, at least, gone down over the course of the year.
The best conclusion one can draw from this is that thorough research is important before choosing to become a property owner. Don’t sign your name on a Florida home loan without conducting proper research first.
