U.S. Housing Market Showing Signs Of Bubbles
April 12, 2013 by UPI - United Press International, Inc.
LOS ANGELES (UPI) — Online real estate firm Redfin.com said the U.S. housing market shows signs of bubbles in certain locations due to prices climbing faster than incomes.
In Los Angeles, for example, the home prices to incomes ratio is now 26 percent higher than it was thirteen years ago.
In addition, “so many people in L.A. are in between where they bought at huge bubble prices in 2005 and 2006 and now, and they are not willing to list their homes,” said Redfin Chief Executive Officer Glenn Kelman.
In theory, home prices rising faster than incomes creates an opportunity for prices to collapse, because at some point prices have gone too far ahead of the ability for people to afford a home.
For now, “The result is there is a rush on what inventory is out there,” Kelman said.
Redfin said 91 percent of the homes they sold in March involved a bidding war, the newspaper said.
Los Angeles came in behind Washington as the second most bubble-like market, the Times said.
In a study of 15 cities, the least bubble-like markets are in Atlanta and Chicago, the report said.