The 2000s real estate bubble—which burst in 2007 and precipitated a once-in-a-century financial crisis and recession—is not something most folks are excited to see a sequel of. But five years of declining or stagnating housing prices, the market turned around big time in 2012, making some analysts worry that we’re seeing the beginnings of Housing Bubble 2.0.
As you can see, home prices in most of the country are far from the bubble levels of mid-2000s, but if you drill down deeper to look at individual markets, one sees a different picture. Jed Kolko, housing economist with the real estate site Trulia, has been tracking home prices across the country to see which markets are over and undervalued. In a forthcoming “Bubble Watch” report, he finds that while most of the U.S. real estate market remains significantly undervalued, there are certain markets that are straying into bubble territory.
According to Kolko’s analysis, which looks at several factors like price-to-income ratio, the price-to-rent ratio, and prices relative to their long-term trend, markets in Orange County California and Los Angeles are more than 10% overvalued. Kolko also pegs the Austin, Texas market at 10% overvalued, while 7 other markets range from 4% to 7% overvalued. Those include:
San Antonio, TX;
Honolulu, HI;
San Francisco, CA;
Houston, TX;
Riverside-San Bernandino, CA; and
Oakland, CA
Unsurprisingly, these markets — concentrated in Texas and California, have also seen double digit home appreciation over the past year, with Orange County real estate appreciating a whopping 23.4% since October of 2012.
So are we in danger of another housing bubble like we experienced last decade? Not quite yet, at least nationally. According to Kolko, the market remains roughly 4% undervalued overall. And in some markets, like Cleveland, Ohio and Palm Bay-Melborne-Titusville, Florida, home prices are still 20% below their fundamental value. Furthermore, even the most frothy markets are less overvalued than the national market was in 2004, when home prices were 24% overvalued nationally.
Read more: Where the Next Huge Real Estate Bubble May Be Building | TIME.com