Recent rapid climbs in home prices don't add up to a new housing bubble, the real estate data firm CoreLogic said in a report released Tuesday (pdf).
Although home prices rose 12.2 percent in May compared with a year earlier -- 15.5 percent in Oregon -- CoreLogic said overall housing affordability remains near record highs and that rising interest rates will slow further home-price increases.
"Because mortgage rates are, by historic standards, still low, housing remains highly affordable, even with the recent increase in prices," the report said.
Bubbles are most often spotted in hindsight, CoreLogic acknowledged. But it added that "there is a long way to go before housing again becomes unaffordable." To return to affordability levels seen between 2000 and 2004, prices would have to rise 47 percent or interest rates would have to rise to 6.75 percent, the firm said.
The affordability analysis was conducted when interest rates were near an average of 3.5 percent nationally. Rates have since risen above 4.51 percent for a 30-year fixed loan, according to Freddie Mac. In the Portland area, prices and sales slipped slightly in June, perhaps reflecting a reaction to the first hint of rising rates.
*courtesy of The Oregonian
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