Atlantic City, N.J. is the only large U.S. housing market that is extremely overvalued, according to IHS Global Insight’s first quarter 2009 “Housing Prices in America” report. By comparison, the company said it selected 52 extremely overvalued metro areas back during the peak of the housing boom in 2005.
IHS Global Insight looks at home prices, interest rates, local incomes, population densities, and historic home-price premiums and discounts to determine what prices “should be.” Metro areas that are 14% above or below that value are considered fairly valued. Places that are 35% or more above the value are “extremely overvalued.” Atlantic City is almost 42% above what it should be, the company reported.
Many of the California and Florida markets that were overvalued a couple years ago are now significantly undervalued. San Diego, for example, is now 21% undervalued. Port St Lucie-Fort Pierce, Fla. is more than 33% undervalued.