Are Rising Housing Prices Cause for Worry?

Housing prices continue to rise across the country, while analysts worry about where the trend might lead. According to a recentCNN Money article, housing prices rose 4.2 percent from February 2014 to February 2015, and bidding wars in many areas of the country are ending with offers above asking prices.

The problem is getting plenty of attention as some fear the beginning of another housing crisis. Already, Denver and Dallas have exceeded housing prices seen in the housing boom, and other markets run the risk of prices outpacing inflation. But why are home prices skyrocketing?

According to CNN Money, current homeowners are staying put, either due to underwater mortgages or a lack of options for new homes. A “normal” housing market has more than a million new houses built each year, whereas only 700,000 houses were built in 2014.

Additionally, strict lending guidelines play a part in keeping housing prices high. While credit has loosened slightly, banks are still reeling from the housing crisis, and homes loans remain out of reach for many would-be buyers.

Experts say it's still too early to tell if a housing bubble looms on the horizon, however, and even if we start to see a crisis emerging, it won’t be the same in severity as it was in 2008. The article goes on to say that any future bubble would most likely be limited to certain geographic areas only.