Broward County Homes Overvalued But Dont Worry About Bubble Yet

Broward County Homes Overvalued But Dont Worry About Bubble Yet

April 5, 2014 | By Paul Owers, Sun Sentinel

Recent price spikes have turned Broward County’s housing
market into one of the nation’s most overvalued — but it’s
still far too soon to worry about another bubble, analysts say

As of the first quarter of 2014, Broward homes were worth 6
percent more than their fundamental values, according to
real estate website Trulia.com 

The fundamental value is the price level at which homes would sell in an area based on historical norms, incomes and rents. Broward tied Miami-Dade County and Ventura County, Calif., for eighth place on Trulia’s list of overvalued markets. Orange County, Calif., led the country at 16 percent. Palm Beach County homes remain undervalued by 3 percent, according to Trulia. The more homes are overvalued, the bigger the risk that prices will fall, but Trulia chief economist Jed Kolko said bubble fears are unfounded at this point. When South Florida’s housing collapse begain in 2006, prices were overvalued by more than 80 percent, Kolko said. “We are not back in 2006,” he said. “The good news is that price gains should slow down this year.” While Broward prices are only slightly overvalued now, that’s still a big change from the past two years. In 2012, Broward homes were undervalued by 10 percent; in 2013, it was 18 percent. Maureen Mullen and her boyfriend Mark LaRose have been searching several months for a $200,000 home in Deerfield Beach. They’re unimpressed with the quality and size of homes compared with their asking prices. “These homes are not elaborate or anything really fancy or special, and to me the buyers are asking a lot of money for them,” Mullen said.  


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Dated: April 7th 2014
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