Are Properties in South Florida Undervalued?
March 30th, 2010 categories: General RE Info, Great Deals, Market Update, Tips For Buyers
Miami and Fort Lauderdale Metro Area Report
As I was reading this article in the South Florida Business Journal Biz I started to play with numbers assuming two What if? scenarios… The article is based on a report prepared by IHS Global Insight and PNC Financial services Group released in March 2010 up to the 4th Quarter of 2009. The study comprises 330 Metro areas including Miami and Fort Lauderdale Metro Areas.
In the Summary they conclude:
- “Two years of relentless house price depreciation finally ended in the Summer of 2009. (…)”
- “We ended 2009 with no extremely overvalued metros, (…)”
- “For the Country as a whole, the housing market is now slightly undervalued. (…)”
Miami Metro Area:
2005 Q4 Price: $ 281,300 Overvaluation 49.4
2009 Q4 Price; $ 180,500 Overvaluation -15.6 (undervalued)
Fort Lauderdale Metro Area:
2005 Q4 Price: $ 259,400 Overvaluation 41.9
2009 Q4 Price; $ 146.600 Overvaluation -24.0 (undervalued)
Average Sold Price* for Miami and Fort Lauderdale Metro Areas: What if?
Based on average sold price I made calculations assuming the potential price increase that could have occurred if the real estate market had performed as expected (approx. 5% annual increases) or assuming properties would increase in price based on the average Inflation rate of the last 10 years (approx. 2.57%). If we take into consideration the projection based on a 5% annual increase in both Metro Areas the actual median price is below the projected price. If we compare it with a projected 2.57% annual increase in Dade the values are very close and in Broward the actual Average sold Price is significantly below the projection.
If we compare the data provided by the IHS Report and the data obtained from the MLS (trendgraphix), we can conclude that even though at some point prices in Dade were more overvalued than in Broward today we may say that Broward’s properties could be a better deal!
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