Those who purchased homes and other residential Miami real estate at the five years ago at the peak of the real estate bubble are feelig the effects and paying the price today.
According to a quarterly update from IHS Global Insight, prices of Miami homes and other residential properties located in extremely hyped metropolitan areas such as Miami, fell nearly 37%, between 2005 and the fourth quarter of last year.
Jeannine Cataldi, senior economist and manager of IHS Global Insight's regional real estate services group said in a news release, "Despite the ever-increasing risk of overvaluation – and subsequent devaluation – buyers continued to purchase properties at heavily inflated prices."
The report found that there were 52 markets including Miami real estate that were extremely overvalued in the fourth quarter of 2005 and 85 more that were significantly overvalued.
The report also noted that it was no surprise that these metropolitan areas crashed hard when the real estate market collapsed.
Miami homes and metropolitan areas in California accounted for 36 of the 52 extremely overvalued markets. Miami came in third on the list at 49.4 % overvalued where prices have fallen 35.8% between the fourth quarter of 2005 and 2009.
According to the report, the average price of a Miami homes in 2005 was $281,300, by the fourth quarter of 2009; the average price had fallen to $180,500.
There were no extremely overvalued metropolitan areas by the end of last year and for the country as a whole, the report suggests the housing market is now somewhat undervalued.
According to the Federal Housing Finance Agency, prices fell by only 0.1% for the fourth quarter of 2009, indicating that the housing market is close to achieving stabilization, the report noted.
Contributed by MLR Realty
