The US Isn't In A Housing Bubble But Southern California Is

Hey, great news: US housing prices are NOT in a bubble. Oh, except here in Southern California, where they are. Trulia's Bubble Watch report, out today, relies on a lot of crazy-sounding concepts like "fundamental value" and "undervalued," but then housing prices and bubbles and money are all just inventions based on shared delusions anyway and what are we talking about again? Disorienting terminology aside, the report at least makes some comparisons that can tell us something--it looks at "the price-to-income ratio, the price-to-rent ratio, and prices relative to their long-term trends, using multiple data sources." So if houses are going for a lot more than what those numbers might predict, Trulia declares a bubble; a lot less, no bubble. Nationwide, housing prices are four percent under what Trulia thinks they should be, so there's no bubble (compare to 39 percent above at the beginning of 2006 and 13 percent below at the end of last year). But in Los Angeles County, prices are 12 percent above where Trulia thinks they should be. BUBBLE. Of the 100 largest metro areas, LA is second most bubbly only to Orange County, which is 13 percent above. While mortgages are tougher to get and housing supplies are a lot lower than they were during the mega mid-aughts bubble, LA home prices have been shooting up over the last year or so (largely due, in fact, to the short supply). While prices are now leveling off a bit, according to the October 2013 numbers from DataQuick, they were still up 24.6 percent from last October.
· Bubble Watch: Home Prices Simmering, Not Bubbling [Trulia]