The U.S. housing market has been on a tear in recent years, with home prices surging more than 50% on average since their trough in early 2012. But experts are now seeing disturbing signs that a bubble appears to be forming in at least three major markets - New York, Miami and San Francisco.
"When you start seeing 20% to 30% year-over-year increases in prices, which we've seen over the last four years in some of these markets, it's just not sustainable," said Daren Blomquist, a senior vice president at RealtyTrac. "People's wages are not rising 20% or 30% a year."
Even the "flippers" - which are investors who buy homes and sell them within a year for a quick profit - are back, which is another red flag. In the boom years leading up to the 2008 recession, speculative investors - many with no housing or real estate experience - jumped into the housing sector, buying up blocks of homes to flip. When the housing market collapsed, many were left with a glut of unsold homes, which exacerbated the housing crisis.
Home flips accounted for 5.5% of all U.S. home sales in 2015, said Octavio Nuiry, managing editor of RealtyTrac's housing news report.
The issues driving a bubble in 2016 may be different from those in 2007, but the end-result could still be devastating.
"It is disturbing to think we could potentially be repeating mistakes that were made just within the last 10 years," where the collapse in property values still leaves a bitter aftertaste, said Blomquist.