What's causing over-inflated housing prices across South Florida?
MIAMI - The greater Miami area, which includes Broward and Palm Beach counties, is the 11th most overvalued area in the country.
Nine other metropolitan areas in Florida are part of the 15 most overvalued cities of the 100 that make up the list in the United States.
Florida International University professor William Hardin says it is all about paying more for less.
"Some of the newer units that we are building, especially in Brickell and some of those areas, are relatively small," said Hardin, dean of the FIU Business School while referring to one of the smaller apartments built in overvalued areas in Miami. "And what they want is different than what I might want if I have three children in middle school."
The profile of the residents who have caused homes to be heavily overvalued is different than what it was in the past, officials suggest.
"Many of the people who moved to Florida are affluent or wealthy young professionals (and) they have more capacity to buy a home than the existing people in the market," said Hardin.
FIU and Florida Atlantic University are the two institutions that participated in a study that analyzed 100 cities and ranked the top 15.
These are the Florida metropolitan areas where buyers are paying rising average premiums for homes, according to the Beracha and Johnson Housing Index:
• Tampa: 42.56%
• North Port: 41.93%
• Cape Coral: 41.66%
• Lakeland, 40.26%
• Palm Bay, 39.89%
• Greater Miami: 38.89%
• Jacksonville, 38.37%
• Orlando, 38.18%
• Deltona, 38%
"Miami is still more expensive than Tampa," said Hardin, when asked about the percentage increase in value at Tampa, which ranks number 1, versus Greater Miami, which is 38.89%.
He cited the overpriced value of property in Miami as higher in terms of price per unit in comparison to income and purchasing power.
"We will actually see a plateauing of prices," Hardin said, adding that the he firmly believes that the supply of smaller units will outweigh the demand.
"When we live in a world where inflation is 4, 5 or 6% and real state is flat in real terms, you will see that people's incomes are going to go up because it's going to be adjusted to inflation, which gives them more ability to buy," Hardin said.
Currently, new family homes recently build are valued at $900,000 in certain centrally located areas.
"The (middle class) buyers are not willing to pay that price, so we're going to see within the next six to seven months and we'll see who wins that tug of war, developers or buyers," Hardin said. "Remain patient, it will get better."