America’s most overvalued – and undervalued – cities

NEW YORK (CNNMoney) — Can a housing market simultaneously be the most undervalued in the nation and one of the worst housing buys? It can if it’s Las Vegas.

Sin City recently drew a rating of “Frankly Dangerous” — the worst possible — from Local Market Monitor, a North Carolina-based firm that provides investors with analysis on local conditions. The only other city to get that kind of thrashing was Orlando, Fla.

Nationally, the great majority of housing markets are now fairly valued, according to Local Market Monitor. Eight markets are overpriced, and 15 are underpriced. That contrasts with the boom years: In mid-2006, 37 of the biggest markets were overpriced, six under and 57 fairly valued.

Las Vegas received a paltry rating even though median home prices there are less $145,000, which is more than half of what they cost at the peak of the bubble and nearly 30% less than what Local Market Monitor calculates would be an “equilibrium price,” or fair market value.

The equilibrium price is based on economic and population growth, construction costs, vacancies, household income and interest rates with an “X Factor” thrown in. That’s a value company founder Ingo Winzer comes up with based on 20 years of market data.

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