No bubble, even in hottest home markets, a new report says
Swift rising home prices, bidding wars, investors flush with cash.
Bubble you say? Not so fast, according to a new report.
Real estate information firm CoreLogic said Tuesday that a bubble has not formed in the U.S. housing market, nor in hot regional markets, adding that rising interest rates will put a brake on any danger.
Southern California’s housing recovery: An interactive map
Freddie Mac said last week that lenders were offering a 30-year fixed mortgage at an average rate of 4.51%, up from a 3.31% record low last fall.
Those increases -- along with the slowly declining percentage of cash sales -- is helping throw some water on a fire that ignited dramatic price increases, the Irvine firm said.
And because the crash forced prices down so far, housing still remains affordable compared to historical norms, CoreLogic said.
Using data through March, when interest rates hovered around 3.5%, the firm said that nearly all of the 25 least affordable states were near their peak of affordability. The District of Columbia and Hawaii were the only pricey markets that were “technically unaffordable,” CoreLogic said.
In California, home prices in May remained 27% below their peak during last decade’s housing bubble.
Nationwide, CoreLogic said one of two things would need to happen to make housing as pricey as it was between 2000 and 2004: interest rates rise to 6.75% or home prices skyrocket another 47%.
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