ANCHORS: JOHN ROBERTS
REPORTERS: VINCE GONZALES
JOHN ROBERTS, anchor:
New numbers on the housing market this week could mean that the bubble may be springing a leak. Wall Street expects a dip in the number of homes being constructed. Vince Gonzales, in Los Angeles, has some of the warning signs among the 'For Sale' signs.
Mr. TOM DAVIES: But again, you have the high ceilings, you know.
VINCE GONZALES reporting:
Last summer Tom Davies bought this Los Angeles home for $670,000. He's still remodeling.
Mr. DAVIES: It was just appraised at $1.1 million.
GONZALES: He isn't alone. Owners in hot housing markets across the country are seeing double-digit annual percentage increases in the price of their homes.
Ms. TRACY KING (Realtor): Lots of French doors.
GONZALES: Realtors say buyers who once thought prices would drop are now fighting to get into a home before they get left out.
Ms. KING: They thought all last year there was going to be a bubble, and then they said, 'It's not a bubble, so I guess I'd better just jump in.' And that's--they're jumping.
GONZALES: So is this a bubble? Despite the irrational prices and desperate demand, economists say that may be too strong a word to describe today's market, but it is overheated.
Mr. STUART GABRIEL (Economist, USC)color>: The rates of house price increases that we've seen in the last couple of years in coastal California and in the Eastern seaboard and the like cannot persist.
GONZALES: A tight housing supply and record low mortgage rates are fueling this white-hot market, but experts predict rates will continue to climb through the year, cooling the market down. And buyers may not be the only ones affected. Homeowners with adjustable rate mortgages may also be in for a surprise.
Mr. GABRIEL: Anyone that's originated a--a mortgage at these deeply discounted rates, those rates are going to ratchet up, and that's going to take a chunk out of their monthly paycheck.
GONZALES: But homeowners like Tom Davies continue to hope.
Mr. DAVIES: Ten years from now, I don't know. This house is worth $2 million, $2 1/2 million? Could we believe that? I think so.
GONZALES: And until prices peak, in some markets, a man's home could continue to cost as much as a castle.
Vince Gonzales, CBS News, Los Angeles.
ROBERTS: Coming up next on tonight's CBS EVENING NEWS, back to Topeka, the school desegregation decision 50 years later.