Phoenix Homes Seen as 39.7% "Overvalued"

Phoenix homes were said to be 39.7% overvalued in the third quarter, according to a study by Global Insight/National City Corp. That's down from 41.0% in the previous quarter. It's also up from 28.2% in the year-ago period. Global Insight/National City Corp. considers any area above 34% to be extremely overvalued, such as San Francisco and Phoenix.

In their report they wrote of the national picture: "Sixty-three metro areas were judged to be (extremely) overvalued during the quarter, representing a decline from 66 metro areas during the second quarter. More important were declines in the share of all housing units, and real estate assets, judged to be overvalued. In terms of housing units, the percent deemed to be overvalued declined from 21 to 17 percent. In terms of single family asset value, the percent deemed to be overvalued declined from 39 to 33 percent. Clearly, we interpret the evidence as reflective of prices reverting to their historic norms."

To read entire report CLICK HERE to see the quarter to quarter price appreciation by city and to see the Past Price Correction list.

Also, Fannie Mae economist David Berson asks: How large is the housing overhang?