Fitch Ratings compiled this list of the five most overvalued and five most undervalued housing markets, broken down as Metropolitan Statistical Areas, in the U.S. based on its quarterly Sustainable Home Price model, which weighs home price trends against the economic fundamentals of the local market, including income growth, unemployment rates, population growth, mortgage rates, rental prices, buyer demand and inventory levels. If home prices grow faster than the rest of the local economy, then housing is becoming overvalued; if homes are trading for prices lower than the local economy can sustain, then housing is undervalued. All of the 'overvalued' markets on this list are clocking home prices at least 15% higher than local economic fundamentals can currently sustain. All of the 'undervalued' markets on this list are clocking home prices at least 10% lower than local economic fundamentals can currently sustain. Fitch also adjusted for inflation and compared current prices to their pre-bubble historical norms.

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