Home prices get even more overvalued
Housing markets have cooled a bit, but not before prices got even less affordable than ever.
By Les Christie, CNNMoney.com staff writer


NEW YORK(CNNMoney.com) - Although many overheated U.S. housing markets lost steam during the third quarter of 2005, most still grew less affordable.

That's according to the Local Market Monitor, a real-estate market research provider.

Most overvalued markets
The cities where housing prices are most out of whack
City Percent overvalued 
Santa Barbara-Santa Maria CA 86% 
Naples FL 72% 
Modesto CA 71% 
San Diego CA 70% 
Stockton CA 64% 
Riverside-San Bernardino CA 64% 
San Jose CA 61% 
Sacramento CA 59% 
Vallejo-Fairfield CA 58% 
Los Angeles-Anaheim CA 57% 
 Source:  Local Market Monitor
Most undervalued markets
Biggest housing bargains in the USA.
City Percent undervalued 
El Paso TX -26% 
McAllen-Edinburg TX -21% 
Fayetteville NC -18% 
Memphis TN -18% 
Augusta GA -17% 
Little Rock AR -17% 
Pittsburgh PA -14% 
Indianapolis IN -14% 
Dallas TX -14% 
Houston TX -13% 
 Source:  Local Market Monitor

Through the third quarter of 2005, 79 of the 100 surveyed markets had gotten more expensive, relative to what Local Market Monitor calculates as fair value.

At the top of the list for overpriced cities was Santa Barbara, Calif. at 86 percent overvalued. The average home there should cost $308,900, according to the Local Market Monitor. Instead it sold for $573,100. The survey found that only 16 of the markets had gotten less expensive.

Overall, 37 markets were found to be severely overpriced, which meant that they were at least 15 percent more expensive than they should be, and only 6 were underpriced by 15 percent or more. Fifty-seven were deemd to be farily priced.

Prices are flattening out

While the slowdown in price increases seem to indicate the market has peaked, some regions, especially in the red-hot Sunshine State, continue to experience accelerating home prices.

These included Naples, Fla. where prices increased 32 percent in the 12 months through the end of the third quarter. That's after more modest increases of 18 percent in 2004 and 9 percent in 2003.

Other still-booming markets included Phoenix (up 34 percent), Cape Coral/Ft. Myers, Fla. (33 percent), and Deltona/Daytona Beach, Fla. (27 percent).

The level of over-valuation matters in three ways, according to Ingo Wenzer, president of Local Market Monitor. The higher it is, the greater the risk of it correcting; the greater the correction can be; and the longer it will take to return to present-day prices after they fall.

"Once markets are overpriced by 40 percent or so, the risk is pretty high and the adjustment can take five to 10 years," said Winzer.

Below is a list of the 100 markets tracked. See also: Real Estate: Buy, sell hold? and 5 slow-market selling strategiesTop of page

City Home prices Rating
Actual Equilibrium Diff.
US Average $251.2      
Albuquerque NM $180.9 $188.6 -4%
Ann Arbor MI $243.1 $239.4 2%
Atlanta GA $203.0 $208.0 -2%
Atlantic City NJ $262.9 $186.6 41%
Augusta GA $158.7 $192.3 -17%
Austin TX $172.9 $171.6 1%
Bakersfield CA $233.5 $168.6 38%
Baltimore MD $283.5 $242.9 17%
Baton Rouge LA $150.2 $168.2 -11%
Birmingham AL $177.8 $197.0 -10%
Boise City ID $168.1 $173.8 -3%
Boston MA $380.4 $285.3 33%
Brownsville-Harlingen TX $129.8 $143.8 -10%
Cape Coral-Fort Myers FL $278.4 $208.2 34%
Charleston SC $251.6 $224.7 12%
Charlotte-Gastonia NC $190.7 $219.9 -13%
Chicago IL $266.3 $234.5 14%
Cincinnati OH $180.5 $206.0 -12%
Cleveland OH $173.4 $183.0 -5%
Colorado Springs CO $208.9 $203.3 3%
Columbia SC $167.3 $189.0 -11%
Columbus OH $192.4 $217.8 -12%
Dallas-Fort Worth TX $160.7 $186.2 -14%
Deltona-Daytona Beach FL $216.8 $168.0 29%
Denver CO $238.0 $216.1 10%
Des Moines IA $167.1 $185.4 -10%
Detroit MI $156.6 $145.4 8%
Durham NC $209.3 $219.7 -5%
El Paso TX $127.5 $171.5 -26%
Fayetteville NC $149.8 $183.0 -18%
Fayetteville-Springdale AR $176.1 $167.7 5%
Fresno CA $269.7 $178.4 51%
Grand Rapids MI $161.9 $160.9 1%
Greeley CO $195.7 $178.4 10%
Greensboro-High Point NC $162.7 $180.8 -10%
Greenville SC $166.7 $183.5 -9%
Hartford CT $237.2 $224.2 6%
Honolulu HI $390.4 $310.1 26%
Houston TX $155.2 $177.9 -13%
Indianapolis IN $170.2 $197.6 -14%
Jacksonville FL $228.7 $190.7 20%
Kansas City MO $171.9 $183.7 -6%
Knoxville TN $161.3 $181.9 -11%
Lakeland FL $170.1 $158.2 8%
Las Vegas NV $302.0 $227.5 33%
Lexington KY $172.7 $188.8 -9%
Little Rock AR $155.9 $186.9 -17%
Los Angeles-Anaheim CA $460.8 $294.1 57%
Louisville KY $164.5 $179.0 -8%
Madison WI $224.6 $208.5 8%
McAllen-Edinburg TX $123.1 $156.2 -21%
Memphis TN $162.6 $197.9 -18%
Miami-West Palm Beach FL $298.7 $194.6 54%
Milwaukee-Waukesha WI $217.1 $206.5 5%
Minneapolis-St. Paul MN $254.4 $226.9 12%
Modesto CA $304.8 $178.4 71%
Myrtle Beach SC $190.7 $185.7 3%
Naples FL $419.9 $244.0 72%
Nashville TN $179.6 $196.2 -8%
New Orleans LA $190.4 $188.0 1%
New York-North New Jersey NY $431.0 $300.5 43%
Ocala FL $176.9 $155.5 14%
Ogden-Clearfield UT $162.6 $160.4 1%
Oklahoma City OK $140.7 $149.0 -6%
Omaha NE $160.5 $172.5 -7%
Orlando FL $239.2 $196.3 22%
Palm Bay-Melbourne FL $249.4 $179.1 39%
Panama City FL $294.4 $211.1 39%
Pensacola FL $217.7 $175.4 24%
Philadelphia PA $247.2 $217.9 13%
Phoenix-Mesa AZ $244.1 $195.7 25%
Pittsburgh PA $155.6 $182.0 -14%
Port St. Lucie-Fort Pierce FL $262.5 $181.6 45%
Portland-Vancouver OR $231.8 $201.6 15%
Provo-Orem UT $173.2 $150.4 15%
Raleigh NC $201.0 $222.4 -10%
Reno NV $338.1 $252.3 34%
Richmond VA $219.7 $205.4 7%
Riverside-San Bernardino CA $325.1 $198.3 64%
Sacramento CA $366.6 $230.9 59%
Salt Lake City UT $194.5 $175.0 11%
San Antonio TX $149.0 $161.0 -7%
San Diego CA $491.6 $289.7 70%
San Francisco-Oakland CA $737.7 $483.1 53%
San Jose CA $599.2 $372.4 61%
Santa Barbara-Santa Maria CA $573.1 $308.9 86%
Sarasota-Bradenton FL $312.6 $218.2 43%
Seattle-Tacoma WA $308.7 $286.6 8%
St. Louis MO $178.3 $172.5 3%
Stockton CA $353.2 $215.1 64%
Tampa-St. Petersburg FL $219.7 $164.7 33%
Tucson AZ $214.8 $171.3 25%
Tulsa OK $133.6 $147.6 -9%
Vallejo-Fairfield CA $386.9 $244.6 58%
Vero Beach FL $291.8 $205.5 42%
Virginia Beach-Norfolk VA $250.0 $215.6 16%
Washington-Arlington DC $377.9 $275.2 37%
Wichita KS $125.6 $140.1 -10%
Wilmington NC $248.7 $217.2 15%
Winston-Salem NC $166.8 $177.8 -6%
↔ Fair Value ↓ Undervalued ↑ Overvalued
Data Sources: OFHEO, FFIEC, Local Market Monitor
National Review of Real Estate Markets
The Local Market Monitor LLC, 70 Glen Road, Wellesley MA 02481, (781) 431-7151, LocalMarketMonitor.com
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.