FDIC IDENTIFIES 55 HOUSING BOOM MARKETS

U.S. Home Prices: Does Bust Always Follow Boom?
The number of boom markets in the U.S. increased by 72 percent to 55 metro areas in 2004, according to a recent report released by the Federal Deposit Insurance Corporation (FDIC). Using the house price index published by the Office of Federal Housing Enterprise Oversight (OFHEO), the FDIC defines a "boom market" as areas where inflation-adjusted home prices increased 30 percent or more in three years. More than 90 percent of the boom markets in 2004 were located on or near the coasts, with 21 boom markets located in California, 18 in the Northeast and New England and 11 in Florida.

According to the FDIC report, housing availability, prices and the terms of mortgage credit are factors that may be driving the increase in boom markets. The report also notes that a housing bust, defined as a market where home prices decline by at least 15 percent over a five-year span, does not necessarily follow a housing boom. Since 1978, only nine housing busts have occurred after a housing boom.
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