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The most overvalued housing markets

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The housing market may be far from bubble territory, but several regions are overvalued, according to recent housing price analyses.

Los Angeles, Orange County and Oakland, Calif., are among the five most-overvalued markets, based on current and historical asking prices, rents and local incomes, according to housing information site Trulia. Asking home prices in Los Angeles are up 21 percent year over year for instance. That market is about 10 percent overvalued, according to Trulia's data. Orange County and Oakland are 12 percent and 7 percent overvalued, respectively, Trulia found. Austin, Texas, and Honolulu are also overvalued, according to Trulia's analyses.

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But nationwide, the housing market is 5 percent undervalued, said Jed Kolko, Trulia's chief economist.

He says buying is still a good idea.

"The decisions that it boils down to for investors is often whether it's worth buying up homes in order to rent them out. And buying still looks cheaper than renting in all 100 largest metro [areas]. Which means for investors, they can find that return from renting out a place," said Kolko.

But real estate investors and investors in homebuilders aren't usually paying attention to the same markets, Kolko said.

"Investors are of course looking for good price deals. But builders are looking longer term at where the economic growth is and where the new household demand is going to be," Kolko said.

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Homebuilding is picking up in some areas in Texas, like Houston and Austin, Kolko said. And despite being among the top 10 most-overvalued markets, construction in San Francisco and San Jose is back to levels before the housing market downturn, according to Kolko.

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