Dive Brief:

• The 2016 Forbes list of the country's most undervalued and overvalued housing markets hinges on jobs, and two Texas metros — Austin and San Antonio — top the overvalued ranking, due in large part to the state's booming economy and influx of workers.
• The five most overvalued housing metros are Austin, San Antonio, Phoenix, Las Vegas and San Francisco. The five most undervalued metros are New Haven, Detroit, Hartford, Providence, RI, and Cleveland, OH. 
• Experts at Fitch Ratings U.S. RMBS group said that while inventory is a consideration in overvalued markets like San Francisco, with ever-rising rents and home prices, the increase in incomes is "what's driving a lot of the demand."

Dive Insight:

Fitch determined the list for Forbes by labeling markets overvalued when home price growth outpaces the local economy, and labeling them undervalued when housing prices are blow what the local economy can handle. 

Connecticut has not fared as well in the employment arena and has seen more than its share of millennials and baby boomers out-migrate to other states. That trend has left two of its metros, New Haven and Hartford, among the top five undervalued markets. Connecticut lost a high-profile business this year, General Electric, to Massachusetts, and Aetna and other insurance companies — the backbone of Hartford's economy — have considered similary moves, which many blame on a new round of state business taxes.

On the other hand, Texas, with no personal income tax and an economy that has overcome the softening oil and gas industries, continues to see businesses and their workers head to the Lone Star state in large numbers. Fitch said these overvalued markets, Phoenix included, have their base in solid, non-cyclical growth and that home prices just haven’t caught up. Detroit, however, is so overloaded with inventory — which has contributed greatly to its undervalued status — that the city has adopted a 40,000-house program of demolition to help eliminate its stock of blighted properties.

The list's overvalued markets are primarily in the West and Southwest, while undervalued markets are largely in the Northeast. One of the reasons for this, Fitch said, was that the foreclosure policies of the Northeast have not allowed a clearing out of distressed properties like in the West and Southwest.

A recent Paragon Real Estate Group report found that a slightly faltering economy has put the brakes on price growth in the San Francisco housing market, at least as far as luxury condos and homes are concerned. Rents have also seemed to hit a plateau, but that this "cooling of a desperately overheated market to something closer to normal" is not something homeowners should worry too much about, according to Paragon.