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

Home Prices Still Modestly Undervalued: Trulia

NEW YORK ( TheStreet) -- Home prices are still undervalued relative to their fundamental value, according to online real estate company Trulia's Bubble Watch.

Although home prices have risen 11% over the past year, national home prices are likely 5% undervalued in the third quarter, suggesting that all the bubble talk in housing is overdone. Homes in the United States were overvalued by as much as 39% during the first quarter of 2006.

Trulia determines whether a housing market is overvalued or undervalued by comparing home prices relative to historical prices, incomes and rent.

Of the 100 largest metros, 81 are still undervalued. Among those that are overvalued, only two markets are overvalued by at least 10% -- Orange County, Calif., and Los Angeles. Other overvalued markets include three Northern California metro areas -- Oakland, San Jose and San Francisco -- and four Texas metros -- Austin, San Antonio, Houston and Dallas -- and Honolulu.

The most undervalued markets include several Florida and Ohio markets. Despite a 33% rise in home prices in Las Vegas over the past year, homes in the area are still undervalued by 16% relative to their fundamentals.

Home prices are less undervalued than they were a year ago, when they were 14% undervalued.

But the pace of home price gains is also showing signs of slowing.

Asking prices grew at a slower pace in July, rising 0.3%.

Rising mortgage rates, increasing inventory and fading investor interest are all likely to cap the gains in prices, according to Trulia economist Jed Kolko.

"Even though prices look less undervalued than last quarter or last year, the price slowdown means our chances of avoiding the next housing bubble just got better," he wrote.

-- Written by Shanthi Bharatwaj in New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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
XHB $33.66 -0.38%
IYR $76.56 -0.83%
FB $117.59 0.74%
GOOG $694.05 0.44%
TSLA $240.85 -2.80%


Chart of I:DJI
DOW 17,778.54 -52.22 -0.29%
S&P 500 2,063.56 -12.25 -0.59%
NASDAQ 4,771.9090 -33.3820 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs