Housing Market Over Correction

It seems that the two straight years of plummeting housing costs have created a situation where there are lots of markets that have housing that is actually undervalued now. To spell it out, now is the time to buy if you are looking for a deal and have the cash!

From Housing Zone:

According to a newly released 2010 report compiled by IHS Global Insight and PNC Financial Services, only 87 of 255 markets are in the overvalued category.

For the first time, no metros are extremely overvalued, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued. For the country as a whole, the housing market is now slightly undervalued. When all of the 330 metro areas are weighted by market value, the nation is 8.6% undervalued. When weighted by housing units, the nation is 10.1% undervalued.

The judgment is based on a comparison of median home prices, local interest rates, population densities and income, plus historic premiums or discounts. Here are the 10 most undervalued areas, according to the study:

• Las Vegas, -41.4 percent
• Vero Beach, Fla., -39.8 percent
• Merced, Calif., -37.7 percent
• Cape Coral, Fla., -36.8 percent
• Houma, La., -34.6 percent
• Port St. Lucie, Fla., -33.3 percent
• Warren, Mich., -32.3 percent
• Vallejo, Calif., -31.9 percent
• Modesto, Calif. -31.8 percent
• Stockton, Calif., -31.8 percent

Two years of relentless house price depreciation ended in the third quarter of 2009. Prices edged up by 0.2% from the previous quarter, led by a 2.1% increase in California. Prices still declined from the second quarter in approximately half of the metropolitan areas studied (161 out of 330), but this is down from over 300 in the fourth quarter of 2008.

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