I am constantly amused by analysis such as this Housing Market Analysis from National City Corporation and Global Insight:
The report named Naples, Florida as the most overvalued of all housing markets in the United States. A single-family, median-priced home there sells for $329,970, 84 percent more than what it should cost -- $180,956 -- according to the analysis.
National City arrives at its estimates of what the typical house in these markets should cost by examining the town's population densities, local interest rates, and income levels. It also factors in historical premiums and discounts for each area. Other markets deemed wildly overpriced included Merced, California (by 77 percent), Salinas, California (75 percent), and Port St. Lucie, Florida (72 percent).
Pay particular attention to the section I bolded. The analysis is highly inaccurate because it does not include 2 very important things: Net Worth and Population Growth. Net Worth is important because many Floridians are retirees with equity of $500,000 or more but who are also on a fixed income, perhaps $40,000 or less. Second, Florida's population is booming as many people want to get away from the cold and many retirees are relocating to Florida. In fact, one major driver of Florida home values are people relocating from New York where home values are at least twice that of Florida's prices.