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SF Real Estate Forecast: Bubble, Bubble, Toil, and Trouble?

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A lot of people are trying to figure out what's ahead for the local real estate market, and every day brings new predictions and (sometimes) conflicting information. This morning, the San Francisco Business Times is the latest to weigh in with news from a Zillow survey showing that a third of the nation's housing experts say the SF market is a housing bubble. Additionally, the report says that 20 percent of those surveyed said that if this isn't a bubble market, it is at risk of becoming one within a year.

Just in case you've forgotten during the recent go-go market, a housing bubble is when prices go up due to demand and speculation. At some point, demand decreases or stalls as supply increases due to the aforementioned speculators. At that point, the bubble bursts and prices drop.

Zillow Chief Economist Svenja Gudell told the SFBT: "A handful of markets—especially the Bay Area—are very hot right now, and it's possible home values may actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise. Whether those local conditions constitute a 'bubble' is up for debate, even among economists."

She tempered the news by adding that she thought that there was not real danger of a "severe crash."

Just yesterday, we reported that the median home price in SF was holding steady at $1.3 million and condos had seen a recent rise in median price to $1.25.

· It's official: San Francisco's housing market is in a bubble [SFBT]
· Housing Bubble [Investopedia]
· San Francisco's Median House Price Holds Strong at $1.3M [Official Site]