Economists see growing threat of new housing bubble

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Price gains in some U.S. markets are unsustainable, Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., tells Bloomberg. “If prices keep going up at this rate for another six months, we will have a bubble, and people will get hurt,” Baker said.

Bloomberg talked to other economists including Zillow’s Stan Humphries and Wells Fargo & Co.’s Mark Vitner, who say that while it’s too early to say another bubble is emerging, prices in some markets are rising at an unsustainable pace.

A recent analysis by Trulia suggested prices are already overvalued in nine of 100 markets analyzed: Orange County, Calif. (overvalued by 9 percent); Los Angeles (5 percent); San Jose (3 percent); San Francisco (2 percent); Austin, Texas (7 percent); San Antonio, Texas (5 percent); Houston (2 percent); Portland, Ore. (1 percent); and Honolulu (0.01 percent). Source: bloomberg.com.