LOS ANGELES–Predictions of a housing bubble continue, although not for the country overall.
But one new forecast suggests there are six states that could be “experiencing the effects of the next housing bubble.”
According to GoBankingRates.com, the six states are:
1. Tennessee. In particular, concerns are being raised over the Nashville market, which has seen the median sale price of a new home rise to more than $250,000, a double-digit increase in home sales and the highest number of home closings since the city’s last housing bubble. Some of the signs that point to an expansion phase include declining vacancy rates and increasing new construction. There is also a “severe shortage” of vacant developed lots, and the area can’t keep up with demand for new homes, according to GoBankingRates.com.
2. Oregon. The warning sign in Oregon, according to GoBankingRates.com, is the trend around the price-to-income ratio, particularly in the Portland market. Portland ranked 15th highest with a price-to-income ratio of 4.6, according to research published in April by the Oregon Office of Economic Analysis. Oregon could also have a potential real estate bubble forming in the Bend market, according to GoBankingRates.com.
3. Nevada. Few states know what a housing crash is like more than Nevada. GoBankingRates.com noted that between 2010 and 2015, foreclosure activity decreased 84.4%, which should be good news, but also quoted one analyst as saying, “The foreclosure rates could be part of Nevada’s long recovery. But they could also be indicative of fundamental problems with the real estate market.” In particular, it could be a sign of very uneven recovery as other parts of the state boom, the analyst said. While Las Vegas is often seen as ground zero on Nevada, Reno is currently seeing a strong boom in large part due to the creation of more than 50,000 new jobs. The market has very little affordable housing, however.
4. California. Similar to Oregon, the price-to-income ratio trend line in California is problematic across numerous markets. In San Jose, the median price of a home is 9.6 times the city’s median household income, which is considered unusually high and indicative of an overheated market, GoBankingRates.com said. The California Association of Realtors’ second-quarter 2016 Housing Affordability report found that “compared to affordability in first-quarter 2016, 25 of 29 counties tracked saw a decrease in housing affordability,” with San Francisco, San Bernardino and Santa Cruz counties being the least affordable areas in California, and home prices in San Diego have reached their highest point in nine years.
5. Florida. A frequent boom and bust state, Florida has seen its recent housing boom starting to cool off, which homes in Miami, for instance, staying unsold for longer periods of time. A number of Sunshine State cities have also seen the biggest year-over-year increase in the share of flips, according to RealtyTrac, reported GoBankingRates.com.
6. Texas. Markets in Texas that may be seeing a bubble include Midland, the center of the oil industry, while Houston, Austin and San Antonio are “borderline,” according to GoBankingRates.com. Fitch recently released a report this year saying Texas houses were overvalued by as much as 15%.