Bubbles Seen in Modesto, Merced

At least two communities in California's Central Valley have moved into "home price bubble territory" and are at high risk for price declines, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.The communities of Modesto and Merced are the communities most vulnerable to a fall in home prices in the near to medium-term future and to the probability of a concurrent rise in mortgage defaults, said Alexis McGee, president of ForeclosureS.com. "Several economists, including building industry consultant John Burns of Irvine, rank Modesto as No. 1 among cities in the U.S. that are in a home price bubble," Ms. McGee said. "And Burns ranks Merced as No. 5." The company can be found online at http://www.foreclosures.com.