Inside The US Housing Market That Robert Shiller Is Already Calling 'Exuberant'

las vegas desert home

The U.S. housing recovery has been causing home prices to rise.

Las Vegas stands out as one of the hottest markets in America with home prices up 15 per cent year-over-year.

“More traditional buyers and sellers are sitting out of the market and investors are bidding up prices for foreclosed homes and [homes] at the lower end of the market,” Quinn Eddins at RadarLogic tells Business Insider.

Eddins says investor activity in Las Vegas has increased 67 per cent year-over-year through December 2012.

All of this has some economists warn that it may be overheating. Legendary housing expert Robert Shiller describes the Vegas market is “frothy” and showing signs of “exuberance.”

Las Vegas was ground zero of the housing bubble.

Home prices crashed as much as 62 per cent, and are still down 59 per cent since their.

Source: CNBC

Seen another way, Vegas home prices are up 15 per cent year-over-year.

Source: S&P Indices

Institutional investors, not traditional homebuyers, are the biggest drivers of prices.

Source: RadarLogic

And the rebound has developers rushing to buy up land.

Source: Review Journal

In Nov-Dec 2012, developers were buying land for $175,000 - $185,000 per acre.

Source: Vegas Inc

In February 2013, that had gone surged to $250,000 - $275,000 per acre.

Source: Vegas Inc

New home sales in Vegas are up 65 per cent year-over-year.

Source: Vegas Inc

The median home price in the Las Vegas-Paradise metro area is $165,000.

$165,000 gets you a 2,323 square foot single family home, like this one in Vegas Manor Tract.

Source: Realtor.com

The house has four bedrooms and two bathrooms.

Source: Realtor.com

It also has its own private pool.

Source: Realtor.com

Meanwhile, the Mansion at Turnberry Place is one of the most expensive homes in Las Vegas selling for about $18 million.

Source: Sothebys Realty

This is what the living room looks like.

Source: Sothebys Realty

And this is the kitchen.

Las Vegas has also seen flash sales with 100 homes selling within 24 hours of hitting the market.

Source: RedFin

Some believe that home prices have been driven by the decline in foreclosures, which has caused supply to tighten.

The Nevada foreclosure fraud law that went into effect in 2011, slowing the pace of foreclosures.

The law requires all documents in the foreclosure process to 1. 'Be filed in the local office of the county clerk.' 2. Requires bank or others looking to foreclose a home to produce a notarized affidavit giving them the right to foreclose. Offenders could get fined or get jail time. Banks have been trying to get this repealed.

Source: Housingwire

At the end of 2012, Las Vegas had 29,454 foreclosure sales, down 38 per cent from 2011.

Source: RealtyTrac

Whether this affects home prices will depend on the pace at which distressed properties hit the market. So far, it's been slow.

But Robert Shiller — the economist who famously predicted that last housing bubble — warns of bubble mentality in Las Vegas.

Source: CNBC

Now look at 15 cities where home prices will appreciate the most in the next five years...

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.