Are You Living in a Bubble?
Richard DeKaser, chief economist for National City Corp., ranks 99 major real estate markets based on how much they are under or overpriced relative to "normal housing values."
Home prices in Salt Lake City? "Too low."
But, in Tucson, Ariz. "Just right."
These were the conclusions of study by Richard DeKaser, chief economist for National City Corp., who ranked 99 major real estate markets based on how much they are under or overpriced relative to what he deems "normal housing values."
In 2004, houses in Chico, Calif. sold for 43 percent more than their fair value, according to DeKaser, while houses in Salt Lake City sold for 23 percent less than their fair value.
To come up with each market’s fair value DeKaser studied data going back 25 years. Among other things, he looked at how much buyers are paying today relative to their incomes verses how much they paid in the past. This helps take into account the premium buyers are willing to pay for such things as location, weather and amenities.
http://money.cnn.com/pf/features/lists/home_valuations/
May 6--Four out of 10 Americans think we're in a real-estate bubble that's likely to burst within three years, according to a poll released Thursday by Costa Mesa-based Experian and The Gallup Organization.
And for the second straight month, consumers appeared concerned about their credit ratings and their ability to pay their debts, survey authors said.
The monthly Experian-Gallup Personal Credit Index, launched in March, dropped from an initial "baseline" score of 100 to 82 in April, company officials said. May's survey shows only slight improvement, with a score of 86.
"We're starting to see some real concerns out there on the consumers' part about what is the prospect for the economy," said Ed Ojdana, group president of Experian Interactive.
Ojdana and Dennis Jacobe, Gallup's chief economist, said consumers likely are starting to feel squeezed by rising fuel prices and interest rates.
Most of the respondents were upbeat about the housing markets in their area: Seven out of 10 believe housing prices will continue rising, and six out of 10 don't see a real-estate bubble.
But Jacobe said it was significant that so many people think there is a housing-price bubble.
"I think most people who sort of know housing would be surprised that four out of 10 say there's a housing bubble in their market," he said. "In 2000, how many investors thought we had a bubble in the stock market?"
Interest rates aren't a major worry. Seventy-five percent of those polled expect mortgage rates to rise, but half of those respondents thought they wouldn't go up more than one percentage point.
That may be why one in five consumers planning to take out a home loan in the next six months will choose an adjustable-rate mortgage, the survey found.
I am unable to post links not sure why so I posted the full article.
John Michael