No Housing Bubble At This Time

No Housing Bubble

Though home prices are projected to grow at a 3 percent to 5 percent appreciation rate, economists at Clear Capital are saying there should be no worries about a housing bubble brewing any time soon. In fact, according to Clear Capital’s Home Data Index, if home appreciation continues at its current pace, prices may not return to peak levels until 2021.

The National Association of REALTORS® reported in its December report that home prices rose 11.5 percent in 2013 compared to 2012. That marked the strongest gain since 2005, when median prices for existing homes rose 12.4 percent.                             housing bubble

Following the double-digit growth in home prices last year, Clear Capital economists predict that national home prices will now fall into line with inflation and follow more historical rates of growth.

“Double-digit gains over the last year, while similar to rates of growth in the run-up to the bubble, are off a much lower price floor,” says Alex Villacorta, vice president of research and analytics at Clear Capital.

However, Villacorta did note that Phoenix and Las Vegas are showing signs of overheating and should be watched closely. Both markets saw yearly gains around 30 percent, but home prices have since been cooling. Home prices in Las Vegas remain 20.8 percent below 2000 levels when adjusted for inflation, but prices in Phoenix are about 1.9 percent above 2000 levels, according to Clear Capital.

Home prices at the metro level, when adjusted for inflation, reveal 46 out of 50 metro markets have home price levels that are at pre-2003 levels. Twenty-five of 50 markets are reporting prices below 2000 levels.

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Source: HousingWire 02/03/2014

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