While a housing bubble has not returned to the U.S., there are early signs it could be forming in some areas.
That’s the assessment from a new report by RealtyTrac, an online real estate database. The report looked at several factors for 475 U.S. counties, including current median prices compared to historical averages and the bubble peak.
Whatcom County is not one of those areas showing signs of developing a housing bubble, according to the report. Prices remain within historical standards and below the peak.
RealtyTrac estimated the median price for a home in Whatcom County at $250,000 in October, $20,000 below the peak. The report estimates Whatcom County’s peak happened in October 2006.
Lylene Johnson of The Muljat Group was wondering if the Whatcom County real estate market was nudging back toward a bubble in 2013, when this area experienced a significant uptick in sales while dealing with low inventory. The market slowed in 2014, however, and inventory increased, easing that concern.
“I’m glad it slowed down, because a lot of people got hurt (in the last bubble),” said Johnson, who regularly puts together real estate reports based on Northwest Multiple Listing Service data. She added that the slowdown hasn’t been enough to shift the market to an oversupply of homes; it is more of a balanced market.
Prices above the historical standard sound an alarm for RealtyTrac officials concerned about a real estate bubble. In October, 98 counties with a combined population of nearly 62 million had median home prices that were higher than the historical norm.
“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,” said Daren Blomquist, vice president at RealtyTrac, in a news release accompanying the data.
For Johnson, consistently low inventory and higher pending home sales are signs that a bubble could be forming. The last bubble around 2004-2007 built up relatively quickly in Whatcom County, she said.
For details on the RealtyTrac report, go to realtytrac.com, click the news tab and the housing and foreclosure reports link.
Here's a look at some of the local trends: