10 Cities with Potential Real Estate Bubbles
Home prices have been on a tear over the last five or six years. Since 2012, when real estate prices bottomed out during the Great Recession, home values have increased 49.90% nationally, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. They went from an index value of 134 to 200.86 in April of 2018.
However, there are cities across the country that have seen a blistering surge in housing prices. The recent rise in interest rates when combined with the rapid surge in real estate valuations have some in the real estate industry concerned about a real estate bubble in specific markets.
Here are 10 cities that have the highest potential for a housing bubble. Based on data from the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, eight of the ten have values that are higher than the pre-crash era.
Note: The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is a composite of single-family home prices and looks at repeat sale prices of particular homes.
Former high: 182.45 (September 2005)
Low: 146.45 (April 2009)
April 2018: 212.85
The city’s recent growth and a strong economy have fueled a housing boom. Some analysts rank it as one of the hottest real estate markets in the country. Boston’s housing prices peaked in 2005 and fell 19.73%. They began increasing again in 2009 and have risen 45.34%. Prices are 16.66% above the 2005 high.
Former high: 126.31 (September 2007)
Low: 112.63 (January 2012)
April 2018: 185.22
The Dallas housing market has been “red hot” according to experts, but it has shown some signs of slowing down in recent days. The Dallas market peaked in September of 2007 but only declined 10.83%. Housing prices have increased 64.45% since 2012 and are 46.64% above the 2007 high.
Former high: 136.47 (July 2007)
Low: 82.54 (March 2012)
April 2018: 144.39
“Hotlanta,” as it’s sometimes called, has seen a booming housing market over the last six years. Housing prices increased at nearly twice the national average in 2017, and show no signs of cooling off. Prices previously peaked in 2007 and fell 39.52%. They have increased 74.93% since the 2012 low and are 5.80% above the previous high.
Former high: 273.93 (September 2006)
Low: 159.18 (May 2009)
April 2018: 280.44
A tight supply is driving the Los Angeles housing market, and prices are at all-time highs. Many homes are approaching and some have even superseded the $1 million mark. The Los Angeles housing market peaked in 2006 and dropped 40.89% over the next three years. Prices now stand at 2.38% above the previous high and have increased 76.18% over the lows.
Former high: 140.28 (August 2006)
Low: 120.37 (March 2009)
April 2018: 213.35
The “Mile High” city has seen a huge population increase and has experienced a strong economy. The housing market has surged in recent years but has seen an increase in housing inventory, a sign that the market might be cooling a little. The market previously peaked in 2006, but only experienced a slight decline of 14.19%. The market increased 77.25% after the downturn and is 50.10% above the previous high.
Former high: 185.76 (June 2007)
Low: 129.01 (March 2012)
April 2018: 229.87
This hipster hot spot is growing. The city added 40,000 new residents in 2015 and 2016 each and 30,000 residents in 2017, according to U.S. Census data. That has created a scorching hot housing market. The market peaked in 2007 and crashed until 2012, falling by 30.55%. The market has increased 78.18% from its lows and stands at 23.75% above the previous high.
Former high: 227.38 (July 2006)
Low: 100.22 (September 2011)
April 2018: 178.97
The real estate crash hit Phoenix hard. The market dropped 55.92% from 2006 to 2011. Since then, the market has roared back. Even though it has still not topped the previous high, it has still increased 78.58%. CoreLogic considers the housing market to be overvalued, but many real estate experts predict low inventory will continue to push prices higher.
Former high: 192.30 (July 2007)
April 2018: 251.59
Housing prices in Washington state are among the hottest in the country, and some experts predict a crash is on the horizon. They increased 4% in the first quarter of 2018, and have increased 13% over the last year. A booming tech industry has caused people to flock to Seattle and that has driven housing prices higher. The market peaked previously in 2007 and fell 30.92%. It has increased 89.38% since 2010 and is 30.83% above the previous high.
Former high: 231.94 (February 2006)
Low: 89.87 (March 2012)
April 2018: 178.68
“Sin City” is the poster child for the collapse of the housing market. The market increased dramatically prior to the crash and fell hard. From 2006 to 2009, prices declined 61.25%. The market has increased 98.82% since its recession low but has still not topped the previous high. Some are predicting prices will go even higher.
Former high: 218.37 (April 2006)
Low: 117.71 (May 2009)
April 2018: 264.29
Anyone who pays even a little bit attention knows the real estate market in San Francisco is sweltering. The tech industry is drawing well-paid talent to the region, and the median price for a home sold in the region is $1.7 million. The market peaked in 2006 and bottomed out in 2009. Since then, it has increased 124.53% and is 21.03% above the previous high.