How much prices lag fundamentals: 20.5% Home sellers in the Rock and Roll Hall of Fame's hometown are definitely singing the blues these days -- good news for would-be buyers. Trulia estimates that Cleveland's home prices, which peaked at 21% above fair value in 2005, have fallen to 20.5% below where fundamentals suggest they should be. But buyers beware: Kolko doesn't expect a turnaround anytime soon. "We're not likely to see strong home-price appreciation in the Rust Belt areas
How much prices lag fundamentals: 20.6% Located just 40 miles south of Cleveland, Akron has a housing sector that suffers from many of the same problems its counterpart to the north faces. "The decline of manufacturing has pulled prices down
How much prices lag fundamentals: 21.6% Located roughly between Jacksonville and Miami, this Atlantic coastal community saw huge gains during the housing boom -- but equally sharp declines in the bust that followed. Palm Bay-area home values peaked in 2006 at 75% above what market fundamentals suggested, but have since fallen back to 21.6% below fair value today, according to Trulia. But even though the region's asking prices rebounded 4.4% over the past year, Kolko doesn't think Palm Bay is out of the glades just yet. He says much of the Sunshine State has big "shadow inventories" of distressed homes that lenders have yet to foreclose on and put up for sale. "There are still a lot of foreclosures to come in Florida," Kolko says.
How much prices lag fundamentals: 22.9% The Motor City's housing sector remains in a major stall. Trulia says Detroit home prices peaked at 42% above fair value in 2005, but have since reversed gears to hit 22.9% below market-fundamental levels today. Kolko attributes the downturn to a basic "Rust Belt decline" that might make Motown a bad choice for investors focused on capital gains instead of rental income. But just as with other Midwest cities on Trulia's list, the pullback makes Detroit housing a good bet for would-be owner/occupants. The site estimates locals who buy homes to live in for seven years will save 70% over what it'd cost to rent.
How much prices lag fundamentals: 24.1% The Las Vegas housing market's fortunes have risen and fallen in recent years faster than a gambler's pile of chips. After peaking in 2006 at 70% above market-fundamental levels, Sin City home prices have tumbled to 24.1% less than fair-market value today, according to Trulia's estimates. That said, a rebound looks like it's in the cards. Trulia found that asking prices on Vegas homes rose a stunning 28.5% over the past year -- the highest percentage gain among America's 100 largest metro areas. "We're seeing lots of investor interest and big price increases in Las Vegas," Kolko says. "Prices are still undervalued, but not as much as they were a year ago."