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Experts say the overvalued market is what keeps South Florida home prices so high

MIAMI – The housing and rental markets have been hit extremely hard as inflation concerns rise across the country.

Real estate economist Ken H. Johnson says homes in South Florida are overpriced. “We are definitely in what is probably the worst housing affordability crisis we’ve seen in Miami in the last 40 years,” Johnson said. “The Miami subway, stretching all the way up through Palm Beach County, is about 30 percent above that long-term price journey. Rental markets in Miami are around 22 percent above their long-term premium. That makes it the most overpriced market in the country.”

Couple that with the price of almost everything going up. “Inflation, higher gas prices, higher food prices, higher material prices, higher labor costs; All of this puts a strain on the individual family budget,” Johnson said.

Jonathan Alfonso runs Portal Real Estate and his own YouTube channel and gives advice to his online viewers.

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“A lot of people are being marginalized, right, and have these affordability issues. But the question for me as a real estate professional is, ‘How does this translate to the housing market?’” Alfonso said. “There is still such massive demand for the very small inventory that we have that this inventory will still command premiums.”

Johnson added, “We have a population influx that is even greater than before, even greater than 12 years ago, and more importantly, we have a tremendous inventory shortage this time.”

As more out of state people move here, they are competing with locals for the relatively few homes for sale.

“We’ve had this two-year period (since 2020) when interest rates were so low, and you also had so many people to refinance. So now there are a lot of people sitting with very low mortgage payments asking, “Why am I selling? Where am I going?’” Alfonso said.

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Johnson said the high prices don’t appear to be coming down any time soon.

“What’s more likely is that we’re going to end up with an extended period of unaffordable housing in the Miami Metro, either for sale or for rent,” he said. “There is no easier way out than to build units and build them as quickly as possible.”

ADDITIONAL RESOURCES

https://business.fau.edu/departments/finance/real-estate-initiative/index.php

https://business.fau.edu/executive-education/housing-market-ranking/

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https://business.fau.edu/executive-education/overvalued-rental-markets/

https://business.fau.edu/executive-education/bhj-buy-vs-rent-index/

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https://www.local10.com/news/local/2022/06/13/experts-say-overvalued-market-causing-south-florida-real-estate-prices-to-be-so-high/ Experts say the overvalued market is what keeps South Florida home prices so high

Sarah Y. Kim

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