This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Overvalued Housing Markets

BOSTON ( TheStreet) -- Home prices are rebounding so much in some U.S. cities that property values have actually risen beyond what local economic fundamentals justify, market watcher says.

"These are [generally] markets that have seen big price increases in the past year," Trulia Senior Economist Jed Kolko says. "They've had some of the strongest price rebounds in the country."

Trulia recently analyzed two key housing-market measures -- price-to-income ratio and price-to-rent ratio -- to see how current home values in America's 100 largest cities compare with historic norms.

The site found that overall U.S. home prices are 7% below where the two indicators suggest property values should be, as much as 9.4% too high in nine cities.

Kolko attributes the individual markets' excesses primarily to low inventories and strong demand that have pushed property values beyond what local incomes and rents can explain.

But he adds that U.S. home prices peaked at 39% above fundamental levels during last decade's housing boom, "so we have a long way to go before we're back in bubble territory."

Here's a look at five cities that Trulia found have America's most overvalued homes.

The site estimated property values by looking at asking prices for residences recently listed for sale on, coupled with historic readings of the S&P/Case-Shiller Home Price Indices and Federal Housing Finance Agency data. Trulia then calculated price-to-income and price-to-rent ratios using U.S. government economic statistics for each metro area.
1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $109.50 0.00%
FB $92.47 0.00%
GOOG $639.16 0.00%
TSLA $226.72 0.00%
YHOO $32.37 0.00%


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs