Skip Navigation



SAN FRANCISCO, May 14, 2013 – Trulia (NYSE: TRLA), a leading online marketplace for home buyers, sellers, renters, and real estate professionals, today launched the Trulia Bubble Watch. A bubble in home prices happens when prices soar above their fundamental value, which is based on supply, demand, and realistic expectations about the future. This new housing market indicator tracks whether home prices are in or nearing bubble territory based on how over versus undervalued home prices are relative to their fundamentals, nationally and in the 100 largest metro areas. View the full report here.

Home Prices Overvalued in Only 8 Major Metros
The Trulia Bubble Watch estimates that national home prices are currently 7 percent undervalued. During the most recent housing bubble, prices were as high as 39 percent overvalued in 2006 Q1. After the bubble burst, prices fell to being 15 percent undervalued in 2011 Q4. So despite recent price increases, home prices nationally remain undervalued relative to fundamentals and are much lower than seven years ago – making today’s price gains a rebound, not a new bubble. At the metro level, prices are above their fundamental value in only 8 of the 100 largest metros. Even Texas metros, which largely avoided last decade’s housing bubble, are less overvalued today than at their peaks during the last bubble.

Markets Where Home Prices Are Overvalued


U.S. Metro

Home prices relative to fundamentals, 2013 Q2

Home prices relative to fundamentals at local peak

When home prices peaked locally


Orange County, CA



2006 Q1


Austin, TX



2007 Q2


San Antonio, TX



2007 Q1


Los Angeles, CA



2006 Q1


San Jose, CA



2005 Q4


San Francisco, CA



2005 Q4


Houston, TX



2005 Q1


Portland, OR-WA



2007 Q1

Note: Among the 100 largest metros.


Pre-Approved Quotes

  • “Home prices fell so much after the last bubble burst that they still remain below normal levels even as prices rise sharply today,” said Jed Kolko, Trulia’s Chief Economist. “Several forces are waiting in the wings that should slow down today’s rapid price gains before they rise into bubble territory again. More inventory, higher mortgage rates, and fading investor activity would each take home-price gains down a notch.”
  • “Although we’re far from bubble territory today, there’ll be another home-price bubble someday, somewhere,” said Jed Kolko, Trulia’s Chief Economist. “The history of American real estate is full of speculation, bubbles, and busts. Even now, most people expect home prices to get back to the peak of the previous bubble again in the next 10 years. Prices may be far from bubble levels today, but we need to stay on guard for signs of the next bubble.”


  • To see how over and undervalued home prices were nationally from 1991 Q1 to 2013 Q2, see here.
  • To see how over and undervalued home prices are in the 100 largest metros, see here.

The Trulia Bubble Watch uses the Trulia Price Monitor for current price trends and the Case-Shiller national index, the Federal Housing Finance Agency (FHFA) national expanded-data index, and the FHFA metro all-transactions indexes. We compared these price indexes to per-capita income (U.S. Bureau of Economic Analysis) and rents (U.S. Bureau of Labor Statistics).

Trulia (NYSE: TRLA) gives home buyers, sellers, owners, and renters the inside scoop on properties, places, and real estate professionals. Trulia has unique info on the areas people want to live that can’t be found anywhere else: users can learn about agents, neighborhoods, schools,crime, commute times, and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyperlocal advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.