As U.S. home prices continue to spiral upward, certain markets are overvalued, most notably, San Francisco, according to a quarterly U.S. sustainable home price report by Fitch Ratings. The report notes that home prices have far outrun the area income as a result of the booming technology sector. Fitch says in the report:
"Driven by the booming technology sector, San Francisco home prices hit an all-time high in third-quarter 2015 (3Q'15) and are now 62% above their post-recession low in early 2012. With home prices up over 10% in the past year alone, the San Francisco housing market is now roughly 16% overvalued, according to Managing Director Grant Bailey. 'The last time the Bay Area experienced this kind of home price growth was during the dot-com era from 1997-2000' said Bailey.
Similarly, home prices increases in some Florida and Texas markets are also outpacing sustainable growth. At the national level, the housing oversupply on the heels of the recession has dried up. For sale inventory has declined and the percentage of new homes sold prior to completion has normalized while new home construction spending continues to show strength."