Housing could be forming a bubble in some markets, real estate information provider RealtyTrac warned recently.
A report, which was released on Dec. 4, analyzed affordability during the years between 2000 and 2014. To produce the document, the real estate information provider culled data from housing markets in 475 separate counties with more than 70 percent of the U.S. population.
It analyzed the portion of median income that buyers would need to purchase a median-priced home. For the entire period, this fraction averaged 28 percent, while that figure surged to a mean of 41 percent during the peak months of the respective counties. In 2014, the portion fell to average of 26 percent of median income.
The report also took a look at foreclosures, noting that while 0.2 percent of loans originated in 2013 attained this status, this number climbed to 0.25 percent in 2014, according to MortgageOrb.com.
At the same time, prices in some areas have been on the rise, surpassing even the inflated values they reached between 2006 and 2008, the media outlet reported. Of the 475 counties analyzed, 58 had higher median prices than they did during the aforementioned boom years.
Daren Blomquist, vice president at RealtyTrac, commented on this situation in a statement.
"Affordability and foreclosure rates by loan vintage are two key metrics that will help consumers, investors, institutions and policy makers identify if a housing market is at risk for another price bubble," said Blomquist. "While 99 percent of markets have not returned to the irrational affordability levels during the previous housing bubble, 1 in 5 markets have now exceeded their historical affordability norms, which is a strong sign that either a new home price bubble is forming in those markets or that home price appreciation will soon plateau until incomes can catch up."
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