DC OVERVALUED, BUT SKY NOT FALLING, SAYS ANALYST

Michael Youngblood of asset-backed securities research at Friedman Billings Ramsey & Co. in BizWeek interview:

What makes you more optimistic than other housing experts?
"I look at two economic indicators that I think drive the housing market: the growth in employment and the growth in personal income. Getting a job or a salary increase is what motivates people to buy their own home."

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."