Though home prices are projected to grow at a 3 percent to 5 percent appreciation rate, economists at Clear Capital are saying there should be no worries about a housing bubble brewing any time soon.
In fact, according to Clear Capital's Home Data Index, if home appreciation continues at its current pace, prices may not return to peak levels until 2021.
The National Association of Realtors reported in its December existing-home sales report that home prices rose 11.5 percent in 2013 compared to 2012. That marked the strongest gain since 2005, when median prices for existing homes rose 12.4 percent.
Following the double-digit growth in home prices last year, Clear Capital economists predict that national home prices will now fall into line with inflation and follow more historical rates of growth.
"Double-digit gains over the last year, while similar to rates of growth in the run-up to the bubble, are off a much lower price floor," said Alex Villacorta, vice president of research and analytics at Clear Capital.
Home prices at the metro level, when adjusted for inflation, reveal 46 out of 50 metro markets have home price levels that are at pre-2003 levels. Twenty-five of 50 markets are reporting prices below 2000 levels.
"With the majority of metro markets still so far below peak prices, it's time for conversations surrounding price trends to shift away from the 2006 peak as the point of reference, and back to current trends and forecasts," said Villacorta.
"While there are certainly investors and home owners holding real estate assets that will be underwater for seven years or more, the current housing market is positioned to behave very similar or even below historical norms, given the current economic climate."