Realtor.com's Clare Trapasso takes a look at the top 10 "overheating" markets in the United States— or those where high prices can't be sustained and must eventually cool down.
In these markets, analysts expect the relentless rate of price increases to slow and dip once prices hit a point that buyers can simply no longer afford. To determine the top 10, chief economist Jonathan Smoke and his team created an index of six factors that create a housing bubble. The criteria include the following: price appreciation, home flipping, mortgages, home prices compared with wages, home prices compared with rent prices, and construction volume.
The top six cities—San Jose and San Francisco, CA; Austin, TX; Salt Lake City; Dallas; and Los Angeles— do show signs of overheating as prices continue to zoom up. The next four on the list—Fresno, CA; Buffalo, NY; Charleston, SC; and Portland, OR—show some elevated risk, but they seem to still have plenty of room to grow.