OREANDA-NEWS. April 02, 2015. Several cities synonymous with the housing boom-and-bust environment nearly a decade ago are now emerging as some of the most overvalued housing markets in the country, according to Fitch Ratings in its latest U.S. Sustainable Home Price report.

Austin and Houston remain the top two most overvalued MSAs per Fitch's Sustainable Home Price Model. However, Las Vegas, Phoenix, Riverside and Miami have all vaulted into the Top 10. 'Prices in each of these boom-and-bust cities have risen by over 45% after touching lows in 2011,' said Director Stefan Hilts. 'However, growth has primarily been driven by tight supply, as construction rates remain low and significant numbers of underwater borrowers limit the number of properties available for sale.' With supply limited, the impact of outside investors and the modest recovery in housing demand has been magnified.

Much of the price growth is a recovery from depressed values that fell below long-term sustainable levels, as calculated by Fitch's Sustainable Home Price model. In Las Vegas, for instance, which saw the worst declines of this group, Fitch estimates home prices fell as low as 25% below a sustainable level at the beginning of 2012. Miami, Riverside and Phoenix all fell more than 10% below their respective sustainable levels. More growth in these markets, though, may be difficult to come by. 'Upside is limited, as these boom-and-bust cities will struggle to absorb any increased supply without a significant impact on price growth,' said Hilts.

This comes as housing markets across the country overall are seeing significant home price gains, though only some seem to be benefiting from strong fundamentals. In the Bay Area, Seattle, and Texas, recent price gains were driven by strong demand while building rates are above long-term averages struggling to keep up. San Francisco dropped out of the top 10 on strong income growth, though it was replaced by another Bay Area city, Oakland, where home prices are overvalued by 13%.