Homes now undervalued?

U.S. homes now undervalued, economists say: Prices fall in 241 metro areas in third quarter, and are likely to fall further

Excerpt:

Compared with their long-term fundamental values, U.S. homes are now 3.8% undervalued, the economists said.

"With no end in sight to the downward spiral of house prices, it is likely that the long-anticipated market correction will now overshoot fundamental valuations on the downside," said James Diffley, head of regional economics at Global Insight.
"Weak economic conditions and wary consumers continue to hold the housing market back," said Jeannine Cataldi, senior economist in charge of Global Insight's regional real estate analysis. "Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path."

However, another economist said home prices are still too high in many bubble areas.

Comment: They are still falling in Minneapolis and her suburbs. (But property taxes are going up! ???)