Austin Ranked as One of U.S.' Hottest Real Estate Markets

While rising home prices may be an indicator of an impeding housing bubble, experts clarify that this may not always be the case. There are certain markets where rising home prices and increasing bidding wars are actually caused by housing shortage and not a housing meltdown. chief economist Jonathan Smoke says, “only the most qualified buyers are able to get financing... ...flipping is back to normal. And we’re building about half as many homes as we need.” 

Analyzing 50 of the largest metro markets in the nation and looking at their housing trends for the past 15 years, they found that there are certain markets where high prices can't be sustained and are showing signs of overheating. Smoke would like to clarify, however, that none of these metros are in "bubble territory". Smoke says some markets are facing certain risks, but their situations do not actually resemble their past scenarios during the bubble years.

Making use of six factors that may create a housing bubble to assess 50 metro markets, Realtor found that these six cities are 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.

The factors used in the study are the rate of price appreciation, number of homes being flipped, buyer to mortgage ratio, home prices to wages ratio, home prices to rental costs ratio, and the number of new homes being built. To read more about this interesting study, you can access the original case study from which this post was based here.

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