BUBBLE WATCH 2008
The median price of homes sold in TX rose 5.1% in 2005 & 4.6% in 2007 & estimated to be 3%
in 2007, according to the Real Estate Center at Texas A&M University.
House values are determined by net rents. Stock price-to-earnings ratios can be helpful when
studying home price-to-rent ratios. Monitoring these ratios can yeild a “normal” price-to-rent
ratio for an area, which in turn can suggest whether a price bubble may occur.
The ratios of prices in metro areas to the avery price for the United States again indicate that
the risk of a home price bubble for Texas in current economic conditions is LOW.