For the second quarter, Trulia’s Bubble Watch factors in home price values by comparing prices today with historical prices, incomes, and rents. In the first quarter of 2014, home prices were about 5 percent undervalued, and they were 8 percent undervalued about a year ago.
At the current pace, home prices are expected to be in line with long-term fundamentals—neither over- nor undervalued—by the last quarter of 2014 or the first quarter of 2015, according to the study.
Three-fourths of the 100 largest metros analyzed are still considered undervalued. These areas were found to be the most undervalued:
- Akron, Ohio: 21% undervalued
- Cleveland, Ohio: 21%
- Detroit: 19%
- Dayton, Ohio: 16%
- Worcester, Mass.: 15%
- Memphis, Tenn.-Miss.-Ark.: 14%
- Toledo, Ohio: 14%
- Chicago: 14%
- Lakeland-Winter Haven, Fla.: 14%
- Providence, R.I.-Mass.: 14%
Source: “Bubble Watch: Home Prices Still Undervalued, But Not for Much Longer,” Forbes.com (June 27, 2014)