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Tampa and Lakeland rank among the country’s most overvalued home markets

Tampa skyline with Hillsborough River in the foreground
City of Tampa
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The greater Tampa Bay region has two of the most overvalued housing markets in the country, with the kind of prices not seen in more than a decade.

A study ranking the most inflated U.S. housing markets places two Tampa Bay area cities in the top 15.

The greater Tampa Bay region has two of the most overvalued housing markets in the country, with the kind of prices not seen in more than a decade.

The study, conducted by Florida Atlantic University and Florida International University, is a monthly effort that ranks the most overvalued housing markets among America’s 100 largest cities. It's based off of publicly available data from the online real estate portal Zillow and other providers.

At the end of Dec. 2021, seven of the 33 most inflated U.S. markets were in Florida -- led by Lakeland at 12 and Tampa at 14.

Both of these markets are at more than 40% above historic pricing.

Eli Beracha, the Director of FIU’s Real Estate School, said that it’s due in part to Tampa and Lakeland’s population influxes.

“Those areas are high-growth areas in terms of just population growth,” he said. “We know that there is a trend (during) COVID and even pre-COVID, that people are moving to Florida, and many are coming to those areas.”

He added that the lack of pandemic restrictions like those in other parts of the country have drawn many people to markets around Florida.

“So I think that's what we see is that large demand coming from the Northeast (U.S.), mostly, but also from other areas,” he said. “And when it comes in a short period of time, when you also have not much supply in the market, that creates overpricing.”

FAU real estate economist Ken H. Johnson added that current overpricing is almost as pronounced as before the housing market crash in 2008.

“In late 2006, Tampa was roughly 68% above where their prices should have been,” he said, adding that the circumstances behind each situation are different.

“The last time around, we saw an actual oversupply of units to either live in for rent or ownership,” he said. “This time around, we have this huge shortage of inventory (that) was 15 years in the making.”

The study also shows cities like New York and San Francisco, two traditionally expensive housing markets, ranked among the two least undervalued housing markets, relative to historic pricing, at 98 and 87, respectively. Miami, Florida’s least overvalued market, came in at 60.

Johnson said these areas saw overpricing even greater than Tampa before and during the 2008 market crash, but likely learned how to better handle these peak from experience in the previous market crash.

Johnson also acknowledged that these issues will not go away immediately, as the peaks for cities like Tampa and Lakeland could take almost “two or three years” to overcome.

“If you keep prices up somewhat, I think the most likely occurrence will be that there will be more of a flattening in the housing market in terms of property appreciation,” he said.

And Beracha suggested that leaders in places like Lakeland and Tampa should not try to solve the problem by passing more laws.

“I think what cities need to do is simply let the market play the course and make it easier for developers to develop properties as long as it's done within the city plan zoning and the requirements city set,” he said.

He adds that excessive regulation by these governments is often what slows down development and decreases the supply of homes that are needed to meet demand.

Among the country’s top 100 markets, Boise, ID, was the most overvalued, relative to historic pricing, at over 70%; Austin, TX, was second at over 60%; and Ogden, UT, third at over 55%.

For a full look at the top 100 metro housing markets, check out the study’s interactive chart.

I am WUSF’s Rush Family Radio News Intern for spring 2022.
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