Forbes: Miami is the #2 Most Over Priced Real Estate Market in the U.S.

Here are the top ten most over priced real estate markets according to Forbes:

  1. San Diego – $601,800 (mhp)
  2. Miami – $371,000 (mhp)
  3. Sacramento – $ 374,800 (mhp)
  4. San Francisco – $736,800 (mhp)
  5. Washington D.C. – $431,000 (mhp)
  6. Honolulu – $630,000 (mhp)
  7. New York City – $469,000 (mhp)
  8. Los Angeles – $584,000 (mhp)
  9. Boston – 402,200 (mhp)
  10. San Jose – $775,000 (mhp)

As you can see, Miami has the lowest median home price yet it is number two on the list. Why, then, is Miami’s market the second most over priced market in the U.S.?

Here is the way Forbes formulated their list:

  • Using the 40 largest metro areas, we started by estimating a “price-to-earnings” ratio for each market. (Like the P/E of a stock, this value attempts to measure the price a homeowner would pay for one dollar of return.) Using data from the National Association of Realtors (NAR), the U.S. Census Bureau and the Office of Federal Housing Enterprise Oversight, we took each market’s median home price and divided it by annual rents minus taxes and insurance for those properties. (We assumed for this exercise that other costs don’t vary drastically from city to city.)
  • We incorporated a second metric: an affordability index. Calculated from National Home Builder Association and Wells Fargo (nyse: WFC news people ) data, the affordability score is the percent of the population who can afford to buy the median-priced home, assuming a 6% mortgage rate.

Miami is, according to Forbes, a “usual suspect” in this respect. Frankly, Forbes left something rather important out: the Greater Miami Area. Yes, all 5 million plus residents of it. Here is the difference in median household incomes between the County and the City not including higher MHI in Palm Beach and Broward counties:



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3 responses to “Forbes: Miami is the #2 Most Over Priced Real Estate Market in the U.S.

  1. I wonder how these ten cities stand now? Anybody know?

  2. And that’s not something they want to be cntnrofoed with by the employee’s union at budget time. Especially not after a number of them were fired and the rest now have their pay frozen. Guess they should be thankful at least they’re not county employees. If the council is so desperate to save money, maybe they could cut some from their pet projects, like buying %100 solar energy. How much does that pointless feel good initiative cost the city?

    • And OMG its not powerful only for imslupe based business’s. For a doctor/dentist/lawyer/contractor/so many places a sign is not going to do shit. Because people don’t go drive around looking for these types of business’s. They look them up online. Only places signs are powerful for a massive supermarkets, shit fast food places, clothing stores, but for any real small business’s they are only as powerful as the road they’re located on. And even then the signs do little to nothing.

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