Cities where houses are most undervalued (and overvalued)

U.S. house prices are only undervalued by around 2% on average, according to the latest research, but they’re still overvalued — and undervalued — by double-digit percentages in some metro areas.

“The more prices are overvalued, the greater the chance that a bubble might be forming,” says Jed Kolko, chief economist at Trulia. Overvalued doesn’t necessarily mean those homes are unaffordable.