One in five housing markets have exceeded their historical affordability norms and may be showing early signs of a housing bubble.
RealtyTrac analyzed 475 counties and looked for three early warning signs of a possible housing bubble:
"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," says Daren Blomquist, vice president at RealtyTrac.
"While 99 percent of markets have not returned to the irrational affordability levels during the previous housing bubble, one in five 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."
RealtyTrac found that 21 percent of the counties analyzed were less affordable than their historical affordability averages. Some of those counties included: Los Angeles County, Calif.; Harris County, Texas (Houston metro area); Kings County, N.Y. (Brooklyn); Dallas County, Texas; Bexar County, Texas (San Antonio metro area); Alameda County, Calif. (San Francisco metro area); Middlesex County, Mass. (Boston area); Oakland County, Mich. (Detroit area); and Travis County, Texas (Austin area).
RealtyTrac's analysis also found that 12 percent of the 475 counties had higher median prices than the peak reached during the 2005-to-2008 housing bubble. Topping the list were Kings County, N.Y. (Brooklyn); New York County, N.Y. (Manhattan); Travis County, Texas (Austin); Honolulu County, Hawaii; Fulton County, Ga. (Atlanta); Mecklenburg County, N.C. (Charlotte); and Erie County, N.Y. (Buffalo).