Limited supply and a strong demand are contributing to a major price surge for homes in Florida.
A new report from Florida Atlantic University and Florida International University shows home prices in the Jacksonville area are overvalued by almost 40%.
The Northeast Florida Association of Realtors (NEFAR) says as of today, home prices in the Jacksonville area have reached a median price of $395,000 and – the highest median prices are $585,000 in St. Johns County.
Prices are not expected to come down anytime soon either. Researchers say the current housing market cycle will be characterized by a prolonged period of unaffordable housing.
Mark Rosener with NEFAR says the good news for homeowners is a market crash is unlikely. He also doesn’t think people should be worried about their homes being overvalued.
“We’ve seen tremendous price increasing throughout the COVID years,” Rosener said. “I really don’t see any price depreciation on the horizon, based on the economic factors of supply and demand.”
Researchers at Florida Atlantic University and Florida International University say Florida has nine of the top 15 most overvalued and steadily rising metro areas in the country.
Tampa tops the list for Florida metros followed by North Port, Cape Coral, Lakeland, Palm Bay, Jacksonville, Orlando, and Deltona.
Tampa, 42.56 percentNorth Port, 41.93 percentCape Coral, 41.66 percentLakeland, 40.26 percentPalm Bay, 39.89 percentMiami, 38.89 percentJacksonville, 38.37 percentOrlando, 38.18 percentDeltona, 38 percent
In Jacksonville, buyers are paying almost 40% more than the historical price.
Rosener says demand for housing is increasing as more people move to Florida and more people are buying homes for the first time.
“Millennials are now forming their households and it’s a very large demographic that’s in the home buying time in their life at this point in time, so we don’t anticipate the demand will diminish much more than what it already has,” Rosener said. “I don’t see inventory growing significantly. So as long as inventory stays reasonable, and demand stays reasonable pricing should remain stable.”
Rosener sees affordability as a bigger issue than homes being considered overvalued especially with insurance rates at an all-time high.
“The answers to that are insurance reform, interest rates to come back down, and the builders to look to build more affordable homes.”
Rosener says homebuyers and homeowners should be patient as he expects home insurance premiums to come back down with new legislation protecting consumers and hopefully, making things more affordable in the future.
Home prices in the Jacksonville area should stay around $400,000 for the foreseeable future, according to NEFAR data. You can read more on the methodology used in the FUA and FIU study here.