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Report: Bay Area Housing Prices Have Hit A Bubble

San Francisco skyline
credit: By Supercarwaar

The Bay Area's record-high housing prices have reached unsustainable levels, according to a new Fitch Ratings report.

Much of the current price growth comes from higher incomes (total area income is up 44% from the prior peak), but even so, home prices seem to have grown faster than income, the report finds.

While most US prices were generally sustainable, it says some regions are overheating (parts of California, Florida and Texas). In the Bay Area, home prices hit an all-time high in Q3 2015 and are 10% above their 2005 peak (and 62% above their post-recession low in 2012), the report says.

Home prices have swelled faster in the past three years than during the 2003-2006 housing boom, and the report likens the current upswing to the dot-com boom from 1997 to 2000. When the dot-com bubble imploded, Bay Area home prices fell by 5% nominally and 10% in real terms.