Fundamental economics tells us that home price growth and income growth are interwoven. Neither can outrun the other for very long. That is what’s concerning about the pandemic’s housing boom: Over the past year, home price growth (20.6%) is four times greater than income growth (4.8%).
That disconnect has more economists flirting with the most hated two words in real estate: housing bubble. But overvaluation, by historical comparison, varies greatly by market.