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Home prices in California’s Bay Area are now at levels that are unsupportable by area income, according to a new report issued by Fitch Ratings.
The newly published “U.S. Sustainable Home Price Report—Fourth Quarter-2015” from Fitch reported that San Francisco home prices rose 10 percent over the past year and reached a new record high during the third quarter of 2015. That market’s home prices are now 62 percent above their post-recession low in early 2012, but the Fitch report cautioned that this market is approximately 16 percent overvalued.
“The last time the Bay Area experienced this kind of home price growth was during the dot-com era from 1997-2000,” said Grant Bailey, managing director at Fitch.
But the Bay Area housing market is not the only one that is overvalued—the Fitch report also cited several markets in Florida and Texas as moving too far beyond sustainable growth.