TAMPA, Fla. (WFLA) — Three cities in the Tampa Bay area rank among the most overvalued housing markets in America, according to a new study from Florida Atlantic University.
Home buyers in Tampa, on average, paid a 42.81% premium for a home, according to the study. That’s the third highest in the country, behind Cape Coral and Atlanta.
Seven out of the top 10 overvalued markets are in Florida, according to the study. Lakeland and North Port also ranked in the top 5.
Home buyers in Lakeland paid a 41.96% premium while buyers in North Port paid a 41.74% premium, according to the study.
“Most cities around the country have seen prices come back in line with their local long-term pricing trends or have witnessed a slight cooling in prices over the last few months,” Ken H. Johnson, a real estate economist at FAU, said in a statement. “That hasn’t been the case in Florida as prices in the state have remained robust, causing premiums to rise throughout the state.”
FAU produces a list of overvalued housing markets every month using publicly available data from Zillow and comparing the average home price in a city with the long-term pricing trend.
Researchers said demand and low supply are the biggest driving factors in higher prices in Florida, despite higher interest rates.
“The likelihood of a significant fall in prices or a dramatic increase is very small,” Johnson said. “There should be little risk if you purchase a property now and are planning to hold it for five to eight years. The strategy of trying to buy now and sell in 12 to 24 months to make a quick profit isn’t likely to work, however.”
Top 10 overvalued housing markets:
- Cape Coral, Florida
- Atlanta, Georgia
- Tampa, Florida
- Palm Bay, Florida
- Detroit, Michigan
- Lakeland, Florida
- North Port, Florida
- Deltona, Florida
- Orlando, Florida
- Knoxville, Tennessee
View the full rankings here.