Many U.S. housing experts worry that the Bay Area’s booming housing market may be overvalued
A third of U.S. housing experts responding to a recent survey warned that San Francisco’s housing market is riding a bubble.
In the survey, conducted by Zillow, another 20% said the city’s housing market was at risk of becoming a bubble within the next year, according to a San Francisco Business Times report. Other cities also generated worries of a bubble – New York, Houston, Los Angeles, Seattle and San Diego – but they were far behind San Francisco, according to the Business Times.
“A handful of markets – especially the Bay Area – are very hot right now, and it’s possible home values ay actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise,” said Svenja Gudell, Zillow chief economist. “Whether these local conditions constitute a ‘bubble’ is up for debate, even among economists.”
However, Gudell said bubble concerns may be overstated.
“It’s difficult to identify bubbles as they’re happening, but it is very clear that nationally we are not seeing a return of the conditions that caused the last national bubble to pop,” he said. “Tighter lending restrictions today mean we aren’t seeing buyers get loans they realistically can’t pay back, like we did in years past. It’s significant that some experts are starting to worry about bubble conditions, but in my opinion, there’s no real danger of a severe crash like the one we all remember from the last decade.”
In the survey, conducted by Zillow, another 20% said the city’s housing market was at risk of becoming a bubble within the next year, according to a San Francisco Business Times report. Other cities also generated worries of a bubble – New York, Houston, Los Angeles, Seattle and San Diego – but they were far behind San Francisco, according to the Business Times.
“A handful of markets – especially the Bay Area – are very hot right now, and it’s possible home values ay actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise,” said Svenja Gudell, Zillow chief economist. “Whether these local conditions constitute a ‘bubble’ is up for debate, even among economists.”
However, Gudell said bubble concerns may be overstated.
“It’s difficult to identify bubbles as they’re happening, but it is very clear that nationally we are not seeing a return of the conditions that caused the last national bubble to pop,” he said. “Tighter lending restrictions today mean we aren’t seeing buyers get loans they realistically can’t pay back, like we did in years past. It’s significant that some experts are starting to worry about bubble conditions, but in my opinion, there’s no real danger of a severe crash like the one we all remember from the last decade.”
