Florida Retirement Buzz

There has been a lot of talk (and print) about real estate bubbles and whether and when they are going to burst. A recent study identifies various locales in Florida that are “Overvalued”, “Fairly valued” and “Undervalued.” At the outset, we can dismiss the “Undervalued” category with respect to Florida as there were none.

The accompanying table lists the “Overvalued” areas in Florida. These areas are in a definite bubble and if you are going to invest in a Florida retirement home in any of these areas, do it with your eyes wide open. This was a nationwide study that identified a total of 39 areas that were ranked as being overvalued:

 

As the table shows, Florida had nine of them, leaving only 30 for the other 49 states! This study was based on the ratio of average local housing prices and local incomes and comparing it with an area’s historical normal value. If the data shows that an area’s housing prices are outstripping the area’s income growth then it is deemed overvalued, and not sustainable longer term.