South Florida is experiencing a housing bubble

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You’ve heard of Florida Man, but that may be no match for Florida bubble. Consider a new study from Florida Atlantic University and Florida International University researchers in South Florida. They found the average home in the region is nearly 35% overvalued relative to its long-term pricing costs, and they’re sounding the alarm.

“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,” Ken H. Johnson, a real estate economist with FAU’s College of Business, said in a statement.

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The combination of rising housing premiums and mortgage rates is “a potential worrying sign for the housing market,” the researchers said. March data from the Top 100 U.S. Housing Markets, which FAU tracks on a monthly basis, shows that home prices in South Florida are up 15 basis points, or 0.15%, from February.

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But what’s most concerning is that the run-up in South Florida home prices could be an indication of a housing bubble. This happens when home prices rise at a rapid pace, demand is up, and inventory is low. All of these are evident in South Florida’s current housing market.

“South Florida is experiencing a housing bubble,” Alyssa Soto Brody, a real estate broker and co-founder of Miami- and New York City-based real estate sales and marketing brokerage Development Marketing Team, tells Fortune. “As we continue to observe the effects of inflation and the impending recession, there is certainly potential for a housing crash in the near future as a large majority of buyers will be priced out of the Miami market.”

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