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The MReport Webcast: Tuesday 10/7/2014

Despite inching closing to the tipping point, home prices still haven't reached a stage where fears of a bubble are justified, according to Trulia. Comparing current movements to long-term trends, the company’s latest Bubble Watch Report suggests home prices nationally remain 3 percent undervalued, a step up from 5 percent in the second quarter. During the housing bubble of the last decade, house prices surged to 34 percent overvaluation at their peak in 2006 before diving to 13 percent undervaluation in 2012.

As of the third quarter, seven of the nation's top 100 markets were more than 10 percent overvalued, five of which are located in the inventory-starved state of California. The top overvalued market at the moment is Austin, which—like most Texas metros—avoided the worst of the crash and has actually bounced back higher than it was in 2006. On the other hand, while a number of California's major markets are high on the list of overvalued metros, they're all still well short of the peaks they hit during the last bubble.

After slowing for the fourth straight month in August, the Federal Reserve's gauge of conditions in the labor market made a slight recovery in September. The Fed's labor market conditions index added 2.5 points in September after increasing only 2 points in August—its lowest pace of growth in 13 months. As a broad measure of the market, the Fed's index includes a number of indicators that go beyond just the national unemployment rate, including average hourly earnings, hiring rates, and labor force participation, among others. It has been cited by Fed researchers as a more comprehensive tool for the central bank's policymakers to use when considering their next move, such as raising interest rates, which they're expected to do by the middle of 2015.

About Author: Jordan Funderburk

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