Earlier this year, after solid price increases nationally (11 percent in
2013 alone) and near meteoric gains in some markets, speculation began about another
housing “bubble.” Memories of the chaos that
followed the last bubble were still very fresh – ongoing in fact – so the
prospect of a repeat was a little scary.
In May 2014 CoreLogic announced a new measure it had added to its Home Price
Index (HPI) data and HPI Forecasts. The
Market Condition Indicator is intended to assess whether individual markets are
undervalued, priced at their actual value, or overvalued by looking at home
prices in light of the long-run sustainable levels that can be supported by
local market fundamentals such as disposable income. An undervalued or overvalued market was
defined as one having a current HPI 10 percent above or below the long-term
fundamental value. . CoreLogic looked at long-term fundamental values
for 300 Core Based Statistical Areas (CBSAs) based on real disposable income
per capital and then calculated the gap between actual or forecasted home
prices and their long-run sustainable levels.