South Fla. homes currently overvalued about 30%

WEST PALM BEACH, Fla. — A South Florida housing expert said the sharp increase in the cost of housing could be costly to the region.

Home prices are still soaring so much over where they normally would be that it concerns one real estate analyst, who said we’re facing a reckoning.

“The reckoning is we have separated so far from the fundamental values in terms of both rents and home prices,” Dr. Ken Johnson, associate dean of graduate programs at Florida Atlantic University, said.

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Johnson studies markets across the country, tracking U.S. rental and home prices.

According to Johnson, 15 housing markets are now overvalued by over 50%. Here in South Florida, that number is 29.84%.

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Dr. Ken Johnson explains that the high cost of housing could have negative impacts on Florida’s economy.

“I don’t think we’ll see a housing crash but our reckoning from separating so far from prices and rents is we’re going to have this long period of housing affordability,” Johnson said.

He points to a steady influx of out-of-state buyers still coming to Florida — particularly Palm Beach County — and a drastic shortage in inventory.

“If we don’t get control of this situation as quickly as we can — and as well as we can — then that limits how well our economy can do,” Johnson said. “We might get to a point where it’s so unaffordable to live here, where are we going to find our firemen and our teachers?”

However, the market is currently still way too hot.

Johnson said the only solution to stability is more inventory, but a fix like that can take up to four years to happen.

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