Is Your City Already Facing the Next Housing Bubble?

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ANXTXJ Victorian houses on Alamo Square with the city skyline in the background, San Francisco, California, USA.
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By Christine DiGangi

Rapidly rising property values in a handful of U.S. markets have some economists saying those cities are experiencing a housing bubble, according to a quarterly report from real estate company Zillow and research firm Pulsenomics. Analysts are most concerned about a housing bubble in the San Francisco Bay Area, where home values have increased as much as 14.7% in the last year.

"A handful of markets -- especially the Bay Area -- are very hot right now, and it's possible home values may actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise," Svenja Gudell, Zillow chief economist, said in a news release about the report. Gudell said it's up for debate among economists whether those conditions constitute a bubble, and the current housing market doesn't resemble the last U.S. housing bubble, which preceded the Great Recession.

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The report is based on survey responses from 108 housing experts, 66 of whom commented on bubble conditions (or the risk for them) in 20 major U.S. housing markets. The consensus is that most of those markets aren't in bubbles and aren't at risk for developing them in the next six months, but a handful of cities show warning signs. Here are the markets where some experts already see housing bubbles.

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Is Your City Already Facing the Next Housing Bubble?

Around 8% (5 of 66) of experts said San Diego is in a housing bubble. The median home price is $521,200 and values are up 6.4% in the last year, according to Zillow. About 9% see the market at risk of entering a bubble in the next 12 months.​

Nearly 9% of experts see L.A. in a housing bubble. The median home price is $554,100, up 7.1% in the last year. Another near 9% said L.A. is at risk of entering a bubble in the next 12 months.

Around 12% (8 of 66) of experts said Houston is in a housing bubble. The median home price is $141,300, and home values are up 8.5% in the last year.

Nearly 9% (6 of 66) of experts said Seattle is in a housing bubble. The median home price is $521,400 and values are up 12.7% in the last year.

Bay Area home prices continue to rise dramatically, as much as 14.7% in the last year.
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