House prices on the rise, but bubbles could form

by Diana Aqra21 May 2013


Former boom and bust markets could be at risk as house prices are expected to rise over the next five years.
Home prices are expected to rise 3.9% over the next five years following a 7.3% rise in 2012, according to the CoreLogic Case-Shiller Home Price Index. But former boom/bust markets will be most at risk for another slump when inventory rises again and supply and demand come back into balance, the report said.
According to the report, the reduction of inventory and new home sales have been the driving factor in rising prices in the West, in former bust markets like Oakland, California; San Francisco, California; Phoenix, Arizona; and Miami, Florida.
But fundamental economic factors will be the key to long-term growth and affordability. The report pointed out that the Texas, and North and South Carolina markets are experiencing home price appreciation more “fundamentally sound” due to economic growth, employment increases, and domestic migration movements. 


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