Houston Area is The Most Undervalued Housing Market in the Entire U.S.

As of their most recent report Global Insight says that houses, including land, in the Houston area are undervalued by 29.1%, more than any of the other 330 metropolitan areas in the study as of the third quarter 2007. Thus, the Houston area has the MOST UNDERVALUED HOME PRICES IN THE US.

This is the question I am asked most often, especially by people moving here from other cities around the world. While it's hard to know for sure, I like the approach taken by Global Insight, the economics research unit of National City Corp., one of the ten largest banks in the US.

Link: http://www.nationalcity.com/content/corporate/EconomicInsight/HousingValuation/documents/3Q2007report.pdf

They start with the premise that houses in any given city should be related to 1) household incomes, 2) population densities, 3) any historical premiums or discounts metropolitan areas have exhibited over time and 4) interest rates. They examined these factors for 330 metro areas now accounting for 78% of all existing housing units in America and 92% of all related real estate value, to determine what home prices should be, using a massive mathematical model with over twenty years of past data.

Link: http://www.nationalcity.com/corporate/EconomicInsight/HousingValuation/default.asp?WT.mc_id=100206