Florida, Ohio have some of the most overpriced U.S. housing markets

Florida and Ohio metros are some of the nation’s most overpriced markets, economists said in a study that also puts several western U.S. cities at the top of the list.

Of the 33 most overvalued metropolitan areas in the nation, Florida has seven while Ohio has four, according to a ranking of the 100 most overvalued markets by Florida Atlantic University College of Business Associate Dean of Graduate Programs Ken H. Johnson and Florida International University Tibor and Sheila Hollo School of Real Estate Director Eli Beracha.

The researchers cautioned that buyers in the cities that made the list would be purchasing at close to the peak of their respective markets.

“The danger is that prices will soon level off or even decline, and you’ll be stuck in that home for a significant amount of time before you can sell it at a profit that makes financial sense,” Johnson said in a press release.

Homebuyers in Boise, Idaho are paying 77% more than they should be, making it the most overvalued market in the nation, the researchers found. Johnson and Beracha incorporate average and expected price changes and estimate how much a market's homes are undervalued or overvalued, relative to historic pricing based on publicly available data from Zillow and other sources.

Austin, Texas homebuyers are paying a 60% premium on homes, making it the second-most overvalued market in the nation, according to the list. Three Utah cities also cracked the top ten: Ogden at third, Provo at fifth and Salt Lake City in ninth place.

Lakeland, Florida and Tampa, Florida were ranked 12th and 14th with buyers paying 42% and 41% premiums, respectively, while Youngstown, Ohio was ranked the 23rd-most overvalued market with a 38% premium.

Markets with limited growth projections like Youngstown are at risk of difficult downturns as mortgage rates rise, Beracha said. By contrast, Miami, the least overvalued market in Florida where homebuyers pay a 21% premium, is well-equipped to withstand mortgage rate hikes, they said.

Homebuyers are paying premiums of 10% or less in pricey markets like Boston, San Francisco, Los Angeles and New York City, according to the rankings. Shoppers in those markets are once bitten, twice shy, the researchers explained.

“It is as if they have refused to be tricked into believing that housing prices only grow to the sky a second time around,” Johnson said.