Twenty-seven "urbanized" areas are facing a home price bubble because housing costs are growing faster than personal income, according to a new research report by Friedman, Billings, Ramsey & Co., Arlington, Va.The report, penned by FBR economist Michael D. Youngblood, notes that 20 of the 27 UAs (urbanized areas) facing a bubble are in California. FBR determined the existence of home price bubbles by creating a ratio of median house prices to per capita income. The UA with the highest bubble ratio is Santa Barbara, followed by Santa Cruz, San Luis Obispo, San Jose, and Salinas. (All are in California.) The investment banking firm said it anticipates that the price bubble will not burst until economic activity in each UA "has contracted for a minimum of four quarters."

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