US real estate markets are slowing. Is Florida the exception?

After two years of near-uninterrupted growth, house prices may have finally peaked in several U.S. cities, according to data from Florida Atlantic University. Still, experts predict Florida’s real estate market will remain strong compared to other parts of the country.

Each month, economists Ken H Johnson of FAU and Eli Beracha of Florida International University compare the expected price of housing with the actual price in the nation’s largest metropolitan areas to see which cities are the most overvalued.

Tampa ranked 9th overall in July, with the average home selling for 58.5% more than the expected price. Fort Myers arrived at No. 3 and Lakeland at No. 7.

Housing premiums – the difference between the actual and expected price – fell in 27 metropolitan areas.

“It’s a sign that places are reaching the top of the cycle and prices are going to start normalizing again now,” Johnson said.

Meanwhile, every city in Florida saw its premiums increase slightly from June to July. In Tampa, premiums rose more than a percentage point.

Even so, Lei Wedge, a finance professor at the University of South Florida’s Muma College of Business, said she believes Tampa real estate prices have already peaked. She said statistical models like the one used in the FAU study often lag behind what is actually happening in the market.

The median sale price of homes in Tampa, St. Petersburg and Clearwater rose from $169,000 in June to $164,450 in July, according to data from Greater Tampa Realtors. The number of active listings also increased, from 391 homes to 494.

Kendall Bonner, a Tampa-based realtor, said she’s seen how rising mortgage rates have helped cool the market in recent months, making it less competitive.

“Buyers got some of their agency back,” she said.

Even so, Johnson said the large influx of out-of-state buyers will keep prices from falling as much as they will in places where populations are stagnating or shrinking.

According to US Census Bureau data, Florida’s population grew 14.6% from 2010 to 2020, but the number of housing units grew only 9.7%.

Although prices may seem out of reach for many Tampa Bay natives, Wedge said homes here still cost less than comparable cities like Atlanta or Dallas. There’s also no state income tax, which makes Florida an attractive option for remote workers looking to save money.

“Tampa is now on the map in terms of how the country sees us,” Bonner said. “We used to be a lesser known gem, now people are taking notice.”

Rather than hoping that prices will suddenly return to pre-pandemic levels, Bonner urged first-time home buyers to explore alternative options such as “rent-to-own” programs.

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