The housing recovery is starting to heat up—so much so in some areas, the "b" word—bubble—is starting to pop up.
"Nationwide, the housing market is not in a bubble. But there are probably some markets that are at risk for getting into bubble territory if they continue at the pace that they're going," said Daren Blomquist, vice president at RealtyTrac.
In a recent report from Realtor.com, the towns seeing the hottest recoveries, based on factors such as inventory, median list price, days on the market and search activity, were primarily on the West Coast, with six of the top 10 in California. Six months ago, eight of the top 10 were in Florida. So, is the recovery, like the settlement of the U.S., moving east to west?
Actually, there are some methods to the recovery madness—but geography isn't one of them.
The pros estimate the housing recovery started just over a year ago. Those early buyers? It was a lot of foreign investors buying up real estate in Sun Belt areas like Miami and Phoenix.
(Read more: Top turnaround towns for 2013)
"There were stories in 2012 of people being outbid for homes—individual homeowners getting outbid by all-cash buyers," said Steve Berkowitz, CEO of Move Inc., the parent of Realtor.com.
Blomquist said buying activity really started to pick up in mid-2012 after Warren Buffett said on CNBC that he would buy up "a couple hundred thousand" single-family homes and rent them out if he had the logistical ability to manage the properties.
"That was really when there was a paradigm shift in the market," Blomquist said. "We started to see these institutional investors jump in and buy single family homes."
(Read more: Warren Buffett jump-starts the housing market)
"Investors really were the leading edge, the front line of this real-estate recovery," Blomquist said. "They're willing to stomach more risk." And that, in turn, helped trickle down to the average homeowner as it helped boost prices and get a lot of homes back above water.
He estimates that roughly 10 to 20 percent of investors buying real estate today are foreign investors—mostly from Canada, Mexico, China and, in places like Miami—South America. He's also heard of a lot of investors from Russia and other eastern European countries in the New York market.
(Read more: )
One common denominator is that many of the markets with big price increases had been among the hardest hit when the housing bubble burst.
According to the latest data from RealyTrac, the markets with the biggest recent pickups are Honolulu; Flint, Mich.; and Albany, N.Y.
Another factor has helped speed the recovery in some markets more than others: how the foreclosure process is handled. Markets like California, Nevada, Arizona and Georgia have seen their recoveries take off because they allow what's called a nonjudicial foreclosure process, which tends to be quicker than the courts.
"Those markets have worked through the foreclosure problem more quickly than other markets," Blomquist said. "What that means is that they don't have that lingering distress … that drags on home prices."
The recovery in California and other parts of the West Coast has largely been driven by the tech economy, Berkowitz said.
So much so, that the recovery in some markets may be getting close to its peak.
In San Jose, for example, prices are 70 percent off their bottom already, Blomquist said. San Francisco is 96 percent off its bottom.
"I think many of the California markets, especially San Jose and San Francisco, are getting back to that bubble level," Blomquist said. "Some markets are close to plateauing in terms of home prices but scaling back the pace of recovery to single-digit growth, which going forward is much more healthy."
So, where are the next hot spots?
Believe it or not, while many parts of Florida have already seen double-digit growth, pros say there's more room to run in Florida.
In Tampa, for example, prices are 38 percent off the bottom, Blomquist said, but they're still 44 percent below their peak in August 2006.
By contrast, prices in San Jose and San Francisco are 12 percent and 22 percent below their peaks, he said.
Miami, Orlando and Fort Myers-Cape Coral are nearly 50 percent off their peaks.
The pros were encouraged by the recovery in Detroit, which made Realtor.com's latest list of the hottest recoveries, but they weren't willing to bet on it as a continued hot spot. The reason? It's a lot safer to bet on sunshine and ocean than on a bankrupt city dependent on jobs to drive housing demand.
One area Blomquist is willing to bet on is Chicago, where prices are 32 percent below their peak.
He's also hearing a lot of buzz about parts of Maryland and the Carolinas. Some specific cities he's hearing interest in are: Salt Lake City and Ogden, Utah; Atlanta; Charlotte, N.C.; Indianapolis; Minneapolis; Nashville and Memphis, Tenn.; Dallas and Houston.
One surprise he didn't expect in the recovery is the demand from large institutional investors.
"All of a sudden, you had hedge-fund types interested in single-family real estate!" he said. "That's helped give a power boost to this recovery that was unexpected."
And, while homeowners have benefited from this influx of investor money as it's driven their property values higher, there's one important player who has yet to join in this recovery: the move-up buyer. That's the couple who gets a starter home, builds some equity and then trades up to a more expensive home.
"We're seeing a market that is very dependent on investors right now," Blomquist said. "In the long term for sustainability, we need those move-up buyers to start purchasing again."
And, if you're wondering why some big Northeastern states like New York, New Jersey and Pennsylvania aren't on the list, you can sum it up in one word: courts. All of those states have a judicial foreclosure process. As a result, the pros are keeping their eyes on these markets.
You may not be able to find a geographic pattern in where the recovery will heat up next, but what the pros are seeing now is a lot of West Coast markets getting close to peak and a lot of East Coast markets, from New York to Florida, with more room to run.
—By CNBC's Cindy Perman. Follow her on Twitter @ponyblog.
Housing recovery hot spots
Here are states/cities where real estate pros say could be the next hot spots where the housing recovery heats up. While these markets have seen some recovery, they're still down significantly from their peak. (See map above)
STATES – New York, New Jersey, Pennsylvania, Maryland, North Carolina, South Carolina, Florida
Cape Coral-Ft Myers, Fla.
Sources: Realtor.com, RealtyTrac