Housing Market Already Shows Signs of a New Bubble

By Diana Olick, CNBC Real Estate Reporter

NEW YORK ( CNBC) -- When housing began to simmer back in 2002, prices were rising around seven percent a year, then eight percent in 2004 and a stunning 12% in 2005.

At the time, words like "bubble," and "unsustainable," were uttered with every monthly reading. No one had seen home prices soar like that since the mid 1970's.

Historically, prices nationally rise about three to four percent a year. The market was clearly too hot, and by 2007 it had reversed dramatically, with prices falling nationally for the first time in history.

Fast forward to today and the housing recovery.

More from CNBC
One Overlooked Fact About the Housing Recovery
New Housing Fears: Home Prices Rising Too Fast?
What Would You Call Tim Geithner's Book?

Barely a year in, home prices rose over eight percent annually in December, according to a new report from CoreLogic. While still down double digits from their 2006 peak, prices are suddenly soaring again and raising some serious red flags.

Analysts at Clear Capital, which runs a four-month moving average price index, note that January's numbers show, "momentum stalls." While they blame this on seasonal slowdowns, they point to Florida as a concern.

"Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list," cautions Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. "While this isn't confirmation that the recovery is finished in the sunshine state, it's certainly something to keep an eye on. These markets led the recovery in late 2011, and share some of the hallmarks for recovering markets overall."

Florida's housing market has been driven by distressed homes, and investors buying them at a rapid pace.

Other markets that saw the most distress during the housing crash, like Phoenix, Las Vegas, and much of California, have also seen so much investor demand, that prices are up by double digits from a year ago.

Phoenix leads the pack, with prices up 26% from a year ago, according to Clear Capital. The "REO saturation" there, that is the share of sales that are foreclosures (Real Estate Owned) is 17%. Mind you, that is down from over 50% just a few years ago, when the market was still crashing. The story is the same in Las Vegas, where REO saturation is still 38%, prices are up over 15% annually. Investors have cleaned out the inventory so much that they are now bidding up prices higher than any expectations, and that is pushing many potential owner-occupant buyers out, especially first-time home buyers.