Overvalued homes common in Florida

Overvalued homes are also common in California, study shows

Given the heated housing market of the last five years, few people would be surprised to discover that some cities have overvalued homes. What does that mean? An overvalued home is one that has a selling price that is out of line with the “normal” price of a similar home in a similar community. With investors staying away from risky stocks the last few years, more and more people have been putting their money into real estate instead. That has driven the market to unheard of levels, and has contributed to making homes nearly unaffordable in some markets.

A recent study shows that nearly 70 cities in the United States have what the company that conducted the study found to be overvalued homes. Worse than that, the study found that 29 of those cities had homes that are overvalued by more than fifty percent.

An overvalued home is one that has a price that is out of line with what a similar house would sell for in other parts of the country.  While California had more cities on the list than any other state, Florida came in second and that will probably come as a surprise to many people, who generally regard real estate prices in the South to be reasonable when compared to the West Coast.

Not the case. The Miami area now has some of the most unaffordable housing in the United States.

Then again, studies like these are largely theoretical. After all, you can’t show a survey to a homeowner who has a house to sell and expect them to lower their price by half just because a study shows that the prices in that city are too high. The market always charges what the traffic will bear, and since everyone needs a place to live, some housing markets will always be hot.

It may come as a consolation to those who are interested in moving to the Sunshine state that prices have been declining somewhat recently. In fact, prices are coming down throughout the country as interest rates have been steadily increasing and as many buyers have simply reached the limit of what they are willing to pay for a place to live. Despite numerous flexible and risky lending options, such as Option Arm or no money down loans

 and interest only mortgages, many people are no longer willing to risk paying huge sums of money for a house while the market continues to soften. It’s one thing to pay a lot, or even too much for a house, but it’s another thing altogether to try to sell that house a year or two later when it may be only worth 80% of the price you paid for it.

For those looking for bargains, on the other hand, it would appear that Texas is the place to buy. A number of cities in the Lone Star State are actually undervalued compared to the rest of the country. Land and housing are plentiful and one can buy a house, big or small, for a great deal than one will pay on either coast. There are bargains throughout the rest of the South, as well, just as long as you stay away from Florida.