Industry News

Will this housing boom go bust?

FDIC investigates causes of house-price booms

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The rapid rise in U.S. home prices, increasing almost 50 percent overall over the last five years, has created a hot-button debate over whether Americans are staring at a possible home-price collapse. The growth in home prices over the past year surpasses any increase in the last 25 years, according to data released by the Office of Federal Housing Enterprise Oversight, which tracks average quarterly house-price changes. Some economists have raised an eye to this unprecedented run-up in prices, saying it may be cause for concern. In evaluating what the recent housing boom could mean for the nation's homeowners, the FDIC in a report titled, "U.S. Home Prices: Does Bust Always Follow Boom?" attempts to define housing booms and busts and considers what causes them. The FDIC finds that while home-price booms cannot sustain forever, not all booms end in busts. Sixty-three U.S. metropolitan areas experienced at least one housing boom since 1978, and 24 cities experienced more than one b...