Massive Home Value Decline Unlikely Despite Overvaluation.

New York -- It is unlikely that the mortgage industry will witness massive declines in home values across the country in the near future despite recent subprime woes, according to a recent report by the GeoStat Advisory, a Laguna Hills, Calif.-based housing consultancy.

In the report, "Estimates of Over and Under Valuation of Homes by Metropolitan Areas," GeoStat states that the growing imbalance between home prices and rents has meant that homes in many markets are now overvalued, since the option of renting, rather than buying, is financially more attractive to potential buyers.

While most regional housing markets in the U.S. exhibit strong signs of overvaluation, value adjustments in 2007 are likely to be in the 3% to 8% range in most markets with the prospect of no growth or nominal growth in others.

"In a study of home values across major U.S. housing markets, we have concluded that most markets are likely to see moderate downward price adjustments in 2007," according to Nima Nattagh, author of the report. "There are significant regional variations, though, with the prospect of drastic price 'corrections' in some markets and the possibility of further price increases in others."

GeoStat's model takes into account the historical ...