Report: Southland housing markets most "bubble"-y in U.S.

Is the housing bubble back?

In Southern California, it just might be.

A report out Tuesday morning from real estate website Trulia ranks three Southland regions among the five most overvalued housing markets in the nation right now, warning a new housing bubble -- at least locally -- could be in the making.

Compared to incomes here and past trends, home prices are 16% higher than they ought to be in Orange County, 13% higher in Los Angeles County and 10% higher in the Inland Empire, according to Trulia chief economist Jed Kolko. Not coincidentally, asking prices are up by 16% or more year over year in all three of those places too. In some parts of the region, sales prices have returned to pre-crash levels. And they have climbed sharply over the last year almost everywhere, though those gains have stalled lately.

MAP: How have home prices changed where you live?

Kolko is not yet worried about a national housing bubble such as the one that tanked the economy in 2008. In most places, home prices are still in line with economic fundamentals. He found only 19 markets, of the 100 biggest metro areas, where housing is overvalued, compared to early 2008 when it was overvalued everywhere.

But of those 19 overvalued markets, eight are in California. So if there is a new bubble, expect it to be starting right here.

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