Handful of Overvalued Florida Markets Continue to Appreciate

Those seeking a Florida home loan is certain parts of the state need to be aware: many cities still depict overvalued prices.

Factors such as rising income led to increase what Local Market Monitor president Ingo Winzer calls the equilibrium value: what the typical house should sell for . Winzer compares the equilibrium value to actual prices to compute the percentage overvalued.

“Although we hear of a slowing real estate market, we don’t yet see any price declines in the data,” says Winzer.

Many hot Florida cities, for example, only grew warmer. Take the following numbers:

• Naples went from 72 percent to 76 percent overvalued
• Sarasota, from 43 percent to 44 percent
• Miami from 54 percent to 55 percent.

The more overvalued a market is, the more likely it will regress toward its equilibrium, according to Winzer. He also says that the greater the overvalue, the larger the correction will be and the longer the time period before the market starts growing again. An overvalue of 40 percent or more indicates very high risk of correction.

What does this mean for Floria home loan applications in the areas mentioned above? They won’t come too cheaply. Other cities, however, are appealing to buyers seeking affordable housing and reasonable Florida home loans.