According to a new study be Global Insight the IE is still 44.6% overvalued. That's better than last year when they found us 65% overvalued. Of course the median price has declined about $70k from last year which is why we dropped.
Here's the article
Study Says 63% of U.S. Housing Markets Are Overvalued
Published Dec 11, 2007
A new study from Global Insight and National City analyzes house prices in America. Data shows that the majority of U.S. metropolitan areas remain overvalued despite falling home prices. Nearly one-third are considered 'extremely overvalued.'
Overvaluation continues to be the norm in Pacific Coast states, Florida and the Washington D.C. area, according to data from Global Insight.
Out of the 330 metro areas examined in its most recent quarterly study, 208 U.S. metros were marked as overvalued--117 documented an increase in overvaluation during the third quarter compared to the second quarter.
To determine what house prices should be, Global Insight considered interest rates, household income, population density, current and former house prices and historical data.
The 20 Most Overvalued Housing Markets
Metro Area 2007 Q3 Home Price Overvaluation
Bend, Oregon $320,100 70.0%
Atlantic City, NJ $273,700 64.4%
Madera, CA $291,600 62.3%
Merced, CA $248,300 56.6%
Prescott, AZ $237,600 53.6%
St George, UT $257,700 51.0%
Flagstaff, AZ $269,200 50.3%
Miami, FL $304,000 48.0%
Medford, OR $279,100 47.8%
Portland, OR $316,600 47.5%
Wenatchee, WA $263,400 47.0%
Bellingham, WA $305,000 47.0%
Ocean City, NJ $328,900 46.9%
Mount Vernon, WA $299,100 46.7%
Longview, WA $211,800 45.1%
Honolulu, HI $666,800 45.1%
Eugene, OR $251,700 44.8%
Riverside-San Berdu $329,600 44.6%
Bakersfield, CA $219,300 42.0%
Los Angeles, CA $512,900 42.0%
Source: Global Insight
Bend, Oregon, is the nation's most overvalued housing market according to the quarterly study. At 70 percent, Bend falls just ahead of Atlantic City, New Jersey, and Madera, California.
Other metro areas that dominated the list included cities in California, Washington, Arizona, Oregon and Florida. All of the cities in the top 20 were overvalued by at least 40 percent.
Home Price Corrections
Home prices have already begun to fall in overvalued (and other) metro areas. During the third quarter of 2007 prices declined in 171 out of the 330 metro areas analyzed in the survey. Eighteen of these areas documented declines of 10 percent or more.
Homeowners living in overvalued markets can expect additional declines over the next three years. The extremely overvalued markets (valuations in excess of +33 percent) are considered to be the markets most at risk for a steep price correction. Price corrections are generally defined as declines of at least 10 percent.
Areas that have experienced price corrections in the past 20 years have declined an average of 17 percent. The median duration of the correction is 17 quarters.