NEW YORK (CNNMoney.com) -- It may be the best time to buy a house in more than four years. According to a new report, home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004.

The Cleveland-based bank National City Corp. (, ), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

But DeKaser cautioned that home prices could fall even further.

"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."

There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.

The report compares actual with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.

The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

"Declines are no longer confined to once-frothy markets," said DeKaser.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.

  Add comment

Name:
E-Mail:
Comment:
Enter code: