Orange County Homes UNDER Valued by 10%?

Jonathan Lansner at the OC Register reports today that, according to a model developed by IHS Global Insight, Orange County homes are under valued by 10.6%.

Here's the chart showing the historical movement of the formula:


IHS uses a blend of regional economic data to calculate the over/under valuation of homes. By this model, the peak of the "bubble" was in the first quarter of 2006 with overvaluation estimated at 34.6%.

This is clearly a broad-brush picture, and doesn't deal with various market subtleties. For example, no distinction is made between homes priced under $500,000 vs homes priced over $1 million, which are like two different universes right now. Nevertheless, it's one more small indication that the worst has been seen and Orange County Real Estate is showing signs of a comeback.