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Associate Editor Toddi Gutner spoke with Veteran analyst Michael Youngblood about his upbeat view on real estate market and his surprising prediction that the greatest price appreciation will be coming in so-called bubble markets.

Despite all the fear that single-family home prices will decline, Youngblood thinks residential real estate is a lot stronger than most people suspect. He bases this assessment on a new economic model he created that forecasts housing prices in 379 metropolitan statistical areas.

Do you think the housing bubble argument is overblown?
Absolutely. It’s overblown because there is no national housing market, so there can’t be a national house-price bubble. However, there are bubbles in 75 of the 379 markets I studied. A bubble exists when the ratio of the median existing house price to per capita personal income exceeds 6.8 times. This definition is based on historical data of when other markets, like Houston and Boston, had bubbles.

Where are the bubbles?
Most of the bubbles exist on the East and West coasts in such markets as New York City, Los Angeles, Washington, Phoenix, Honolulu, and Tacoma, Wash. Only 12 of the 75 cities are located inland: Boulder, Colo., Coeur d’Alene, Idaho, Flagstaff, Ariz., and Las Vegas among them.

What markets are likely to show the biggest price gains and declines this year?
We expect the greatest gains in Bakersfield, Calif. (43%), Fort Myers, Fla. (42%), Stockton, Calif. (39%), and Punta Gorda, Fla. (35%); the biggest declines in Harrisburg, Pa. (8%), Odessa, Tex., Roanoke, Va., and Utica, N.Y. (all 6%).