Home prices keep rising- with Colorado showing a 10.3% year over year price change.   Higher prices are usually seen as a good sign for the economy but the rapid rise in home prices is fueling speculations of another housing bubble. Is the market showing signs of overheating and is the current pace is not sustainable?

Fitch Rating reports home prices across the country as overvalued by about 17 percent.

 

The danger is that overvalued markets could stall if interest rates rise as the economy rebounds: “When an expectation of rising rates is coupled with rising price levels,” the report notes, “there could be increased pressure on the housing market that could reverse recent gains.” That echoes an argument that Zillow’s (Z)chief economist, Stan Humphries, made in April, 2013 when he said that low rates were acting like a “carnival funhouse mirror” that distorts reality. Cheap mortgages, he said, made home appear affordable when in fact, they were overvalued relative to what people are earning.

 

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Single-family home prices rose in August, 2013 posting their strongest annual gain in more than seven years, according to the S&P/Case Shiller Home Price Index data.

And while Case Shiller data shows home prices have risen 12.8% over last year, data shows the pace of home value appreciation has slowed quarter to quarter this year.

 

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 " I believe that Denver is not in a housing bubble," says Barry Kunselman, a realtor specializing in Central Denver real estate.

"While Fitch ratings in November 2013 points out to an unsustainable increase in Colorado home prices, S&P Case Shiller Home Price Indices indicate just a .2% month over month increase which is lower than most major cities in the United States," Barry expounds. 

Thinking about buying or selling a home but not sure where to start? ?Call Barry at 303-887-0588 for the must know info. www.buydenverurbanhomes.com