BOCA RATON, Fla. — Homes are being overvalued by an average of 20% in major Florida cities as of June.
A study done by researchers at Florida Atlantic University and Florida International University identified five major Florida cities where houses were being sold for more than they are worth.
These cities are Jacksonville, Orlando, Tampa, Miami and Tallahassee.
Out of the five, Tampa ranks the highest with a 32% premium.
Despite the increase in housing prices, the research suggests that Florida's housing market will not crash because prices are expected to level out in the future.
Dr. Ken H. Johnson, a real estate economist and associate dean in FAU's College of Business, does believe that homeowners will be stuck paying high premiums after housing prices level out.
"Trees do not grow to the sky and neither do home prices," Johnson said. "We're nowhere near where we were at the peak of the last housing cycle, but we do need to be careful. Walking away from an obviously overvalued home may be the best thing buyers can do in this kind of market."
Eli Beracha, a professor at FIU's Hollo School of Real Estate, suggested that people should rent spaces to live for the time being.
"Our research on buy vs. rent indicates that on average right now, renting and reinvesting is a particularly good wealth creation strategy," Beracha said. "More people who rent and reinvest would help alleviate current pricing pressure, which is a good thing."