The housing markets in nearly three-fourths of the top 52 U.S. cities -- including such sometimes overlooked places as Cleveland, Milwaukee and Minneapolis -- are showing signs of overheating, with housing prices greatly exceeding gains in personal income, observes Merrill Lynch & Co., New York. "What the regional data show, in our opinion, is that these 'local' markets represent a big enough slice of economic activity that should they falter, we could see a fairly hefty impact on aggregate U.S. economic growth," says Merrill.
It figures that even if housing prices simply stagnate, the cost to GDP could be almost half a percentage point this year and more than a full point in 2006.
