Recent increases in home prices have already ignited new talk of a housing bubble. Don’t believe it.
Some regions are seeing a surge of housing demand amid extremely low interest rates and investors searching for opportunities. And it is true that some regions are up more than 25% from their bottom. But as Dan Greenhaus of BTIG LLC points out, none of the 20 cities tracked by the Standard & Poor’s Case-Shiller home-price indexes is back to its peak level.
“Those previous peaks may not have been justified but they were and are largely seen as ‘bubble levels,’” said Mr. Greenhaus. “Can home prices again be in a bubble and yet be 27% below their previous peak? Perhaps, but we don’t yet think so.”