No. 1 most-overvalued market: Orange County, Calif.

How much prices exceed fundamentals by:
9.4%

This popular residential area adjacent to Los Angeles has seen asking prices on homes shoot up 18.6% over the past year. That's far above the 3.2% gain recorded for rents.

Kolko attributes the higher property values to strong investor demand, good job growth and a dearth of available residences due to underwater homes.

But again, Trulia doesn't see a bubble forming. The site estimates Orange County home values got as high as 71% above market fundamentals in 2006.

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