These Real Estate Markets Are Getting Very Hot

In a handful of markets, home prices are surging faster than inflation. However, rising home prices and the increase of bidding wars in some markets are due to a housing shortage and are not a sign of a housing meltdown,® reports.

Read more: 3 Reasons We’re Not in a Housing Bubble

Also, “only the most qualified buyers are able to get financing” for mortgages, says Jonathan Smoke,®’s chief economist. “Flipping is back to normal. And we’re building about half as many homes as we need.”

Smoke analyzed the 50 largest metro markets in the nation and looked at their housing trends from 2001 through 2015. He says there are some markets where the high prices likely can’t be sustained and are showing signs of overheating, though none of the metros are currently in “bubble” territory.

“There are places that have risks,” Smoke says. “But even those places do not resemble what they looked like in their actual bubble years.”®’s research team pinpointed six factors that create a housing bubble to assess the 50 metro markets, including how quickly price appreciation has been climbing, the number of homes being flipped, how many buyers are getting mortgages, home prices compared with wages, home prices compared with rental costs, and the number of new homes being built.

Smoke says the following six cities were showing the most signs of overheating:

  1. San Jose, Calif.
  2. San Francisco, Calif.
  3. Austin, Texas
  4. Salt Lake City, Utah
  5. Dallas, Texas
  6. Los Angeles, Calif.

Source: “Bubble Watch: Could the Housing Markets in These Top Cities Be Getting Too Hot?”® (July 18, 2016)

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