The euphoria in the U.S. housing market may be flashing a danger signal, and lofty home values could be at risk of a sharp drop.

Record low interest rates, historically tight inventories and the COVID-19 pandemic pulling forward the flight from city centers to the suburbs have sparked an unprecedented rise in U.S. home prices.

“The ‘Black Swan’ is the inevitable collapse in U.S. home prices —they are in the stratosphere benchmarked against all the fundamental factors that drive valuations,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research.

Home prices soared by a record 16.6% year over year in May, according to the national Case-Shiller index, and are now 38.1% above their 2006 peak.

The surge has made home prices 25% overvalued compared with residential rents, almost 50% above normalized levels when factoring in inflation and more than 25% overvalued versus income measures like the employment cost index, according to Rosenberg.

The “best cure for high prices is high prices,” he wrote.

Recent data shows homebuyers are becoming more hesitant with prices at unprecedented levels.