IHS Global Insight's U.S. housing valuation analysis for the fourth-quarter 2008 shows that the housing crash has worked to reduce overvaluation in residential real estate markets across the country.
From IHS Global Insight:
Extreme overvaluation is now essentially nonexistent. Only Atlantic City, New Jersey met our definition for extreme overvaluation during the fourth quarter, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued. For the country as a whole, the housing market is slightly undervalued. When the 330 metro areas are weighted by market value, the nation is 8.4% undervalued. When weighted by housing units, the nation is 10.2% undervalued.
Only the Pacific Northwest remains overvalued across a wide region. And the protracted declines in 17 metros in California and Florida have now resulted in their undervaluation.