By Chris Matthews
October 23, 2014

The real estate bubble that burst in 2006 took six additional years to entirely deflate, with home prices hitting rock bottom in 2012. But by 2014, home prices, on average, have returned to their pre-bubble norms.

And with the economy growing only modestly, and average incomes growing slowly, there isn’t a lot of reason to expect that home price appreciation will do much more than keep up with inflation in coming years. But that’s on a national level, and local markets behave much differently. In fact, there are several markets in America where analysts argue that–when compared to historical trends, incomes, and rents–current prices look overvalued.

Real estate data firm Trulia compiles statistics on both the amount of home price appreciation in each U.S. metro area as well as estimates of how overvalued homes are in those areas compared with historical trends. According to Trulia, even if many of these metro areas appear overvalued, there’s no reason to believe that we should expect a crash in prices anytime soon, as we’re nowhere near the price levels we saw in the years leading up to the housing crisis. At the same time, prospective buyers in these areas should realize that real estate is pricey there, and perhaps temper their expectations for price appreciation to continue indefinitely.

By combining Trulia’s estimates on cities with overvalued real estate with figures on the speed at which prices have gone up year-over-year as of August 2014, we present the 13 hottest real estate markets in the country:


1. Austin, Texas

Austin Dell's home town, dubbed Silicon Gulch, has been a hotbed of tech startups for a couple of decades now, a trend accelerated over the past five years by the annual South By Southwest conference that draws entrepreneurs and investors from all over the world. "There is definitely a boomlet going on in Austin," observes Silver. "It's a great place for startups to get visibility." And for techies to get jobs: Listings on Dice are up 16% over this time last year.
Courtesy: Austin CVB

Year-over-year home price appreciation: 11.9%

Overvaluation: 19%


2. Riverside-San Bernardino, Calif.

Riverside, California
Photo by David Liu—Getty Images

Year-over-year home price appreciation: 13.8%

Overvaluation: 11%


3. Los Angeles, Calif.

Downtown Los Angeles
David Liu—Getty Images

Year-over-year home price appreciation: 8.9%

Overvaluation: 15%


4. San Francisco, Calif.

Mathew Spolin Getty Images/Flickr RM

Year-over-year home price appreciation: 11.2%

Overvaluation: 12%


5. Orange County, Calif.

Orange County Homes
Mitch Diamond Getty Images

Year-over-year home price appreciation: 6%

Overvaluation: 15%


6. Miami, Fla.

Photograph by Joe Raedle—Getty Images

Year-over-year home price appreciation: 15.6%

Overvaluation: 5%


7. San Jose, Calif.

Downtown San Jose
Bernd Geh Getty Images

Year-over-year home price appreciation: 10.4%

Overvaluation: 10%


8. Oakland, Calif.

San Pablo Street in Oakland, California
Richard Cummins Getty Images/Robert Harding World Imagery

Year-over-year home price appreciation: 12.4%

Overvaluation: 7%


9. West Palm Beach, Fla.

West Palm Beach, Florida
Danita Delimont Getty Images/Gallo Images

Year-over-year home price appreciation: 14.5%

Overvaluation: 5%


10. Houston, Texas

Houston, TX They say all things are bigger in Texas. And now Texans can include what they pay for rentals.
Photo: John Zellmer/Getty Images

Year-over-year home price appreciation: 10.4%

Overvaluation: 8%


11. Honolulu, Hawaii

Brigitte Merz Getty Images/LOOK

Year-over-year home price appreciation: 6.7%

Overvaluation: 10%


12. Denver, Colo.

Patrick Frilet—Getty Images/Hemis.fr RM

Year-over-year home price appreciation: 9.4%

Overvaluation: 7%


13. Portland, Ore.

Eri Morita Getty Images

Year-over-year home price appreciation: 8.5%

Overvaluation: 6%

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