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By Giulia Carbonaro
Senior Reporter
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The Florida metropolitan areas of Palm Bay and Deltona are considered at "very high" risk of housing price drops over the next 12 months, according to the latest CoreLogic Market Risk Indicator (MRI).
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The financial analytics company's monthly update indicates that the metropolitan areas with what it describes as "very high" chances (above 70 percent probability) of seeing housing price cuts in the coming year are Palm Bay-Melbourne-Titusville, Florida; Atlanta-Sandy Springs-Roswell, Georgia; Spokane-Spokane Valley, Washington; Deltona-Daytona Beach-Ormond Beach, Florida; and Greenville-Anderson-Mauldin, South Carolina.
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While CoreLogic expects home prices' growth at the national level to slow down into the next year compared to a year earlier, most of the cities the company expects to experience housing price cuts in the coming 12 months are in the South. Florida dominates the list with two metro areas.
"Both markets have seen a significant surge in prices since the onset of the pandemic and prices are up some 60 percent over the period," CoreLogic's Chief Economist Selma Hepp told Newsweek.
"At the same time, income growth in those markets has lagged relative to home prices, which suggests that they are overvalued and could see some adjustments to align back to the rate of income growth. Unlike some of the other south Florida markets, these two have not seen the same rate of influx of higher income buyers, which also means that affordability is relatively more stretched in Palm Bay and Deltona."
Newsweek contacted Florida Realtors for comment by email on Tuesday morning.
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The report comes at a time when prices at the state level are once again on the rise in Florida, as demand is high and inventory still chronically low, despite new constructions. As of April, the latest data made available by Redfin, the median sale price of a home in the Sunshine State was $422,500—up 5.2 percent compared to a year earlier.
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Home prices at the state level only dipped slightly year-over-year in May 2023 (-0.6 percent) and June 2023 (-0.18 percent), when the correction of the U.S. housing market had already found an end.
Last month, a newly released study from Florida Atlantic University (FAU) and Florida International University (FIU) found that the average home in South Florida is nearly 35 percent overvalued relative to its long-term pricing costs, up 15 basis points from the month before—raising fears of a bubble developing in the regional market.
"This trend does concern me as prices are still going up in the Miami metropolitan area, but not in the rest of the measured areas in Florida," said Ken H. Johnson, Ph.D., real estate economist with FAU's College of Business, in a press release.
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"Price growth should be tepid considering the slowdown in rents and rising interest rates, but South Florida prices continue to rise despite these market forces."
But while in some Florida cities home prices are rising fast, as in East Lake (which experienced a 46.4 percent price growth between April 2023 and April 2024), Miami Beach (+38.7 percent), Florida Ridge (+34.1 percent), Lauderhill (+30.1 percent) and Palm City (+28.8 percent), others are experiencing price drops.
The median sale price of a home in North Port was $377,000 in April, according to Redfin, down 1.8 percent compared to a year earlier. In the same month, the median home sale price of a home in Cape Coral was $402,495, down 0.86 percent from April 2023. In Tampa, the median home sale price was $430,000 in April, down 1.1 percent year-over-year.
Update, 6/13/24 6:15 a.m. ET: This article was updated with a comment from Selma Hepp.
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