The study examined the nation's 317 biggest housing markets, and confirmed what we already knew: the most overheated markets are also seeing the fastest price appreciation, although even that appreciation seems to be slowing down in our current economy.

Seventy one of the 317 markets examined reached the threshold of "severely overpriced," indicating a minimum predicted overvaluation of 34 percent.

During the first quarter of 2006, the 50 most overvalued markets experienced a 10.1 percent annual rate of price appreciation. During the same period, the 50 most undervalued markets saw prices rise just 2.7 percent.

Not surprisingly, California and Florida accounted for 17 of the top 20 most overvalued markets, with Naples, Florida leading the way. A median priced single family home in Naples sold for $383,000, a full 102 percent more than it should cost - $189,600 - according to the study.

The research, titled the National City Housing Valuation Analysis, attempts to predict what home prices should be, taking into consideration differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts.

Since 1985, there have been approximately 66 known local market price declines, and researchers have attempted to identify characteristics which preceded those declines. By looking for those potential leading indicators, the study hopes to be able to better predict future declines.

Researchers found that when a local real estate market is overvalued by 34 percent or more, it is at significant risk of some price reductions in the future. As recently as first quarter 2004, that condition of risk was found to apply to only three metro areas, accounting for just 1 percent of all single family house values nationwide.

Atlanta placed remarkably well in the overall survey.

Researchers found that, during first quarter 2006, metro Atlanta homes sold for a median price of about $175,800. That figure appears to be slightly higher than the price predicted for Atlanta homes, but by less than one percent, a sum deemed statistically insignificant.

In addition, the median pricing in Atlanta continues to be favorable when compared to the national existing home median price for April of $223,000, as reported by the National Association of Realtors.

If I had to guess, I would look for Atlanta home sales to soften through year end and for prices to remain about where they are today. Given the positive differential between our market and the national average, I believe it is unlikely that Atlanta will see any significant price decline in the near future.

Other Georgia metro areas showed mixed results in the valuation. Athens came up overvalued by only 1.2% at $139,500, while Macon appeared to be undervalued by 6.6% with a median price of $100,000. Coastal cities Savannah and Brunswick topped the overvalued list, with median prices of $144,300 (22.2% overvalued) and $122,500 (16.5% overvalued) respectively.

Interestingly, coastal cities led the over-valuations nationally as well.

Behind Naples, Florida, which ranked number one, were Salinas, Merced and Stockton, all in California. Each of those communities has a median home price that is more than 70 percent overvalued, according to the study.

Some of the other findings of the study are interesting:

* Overvaluation became more pervasive during the first quarter of 2006, leading me to wonder if some of what we are seeing is a lag effect.

We have been hearing so much about a "price bubble" over the past couple of years that many consider it unrealistic. That is especially so in Atlanta, where moderate price appreciation and low comparative prices give this region an advantage over super-heated metros.

* Quarter-to-quarter price appreciation is slowing in most metro areas, and is nearly flat in San Diego and Boston. These are two of the areas where price appreciation has been hottest in recent years.

It is important to remember we have had sixteen consecutive interest rate increases in recent months from the Federal Reserve, and borrowing costs have risen.

The first quarter of this year also saw the fifth consecutive quarterly increase in rates for a 30-year fixed rate conventional mortgage. Eventually, this must have an impact on demand.

* Price appreciation at the metro level, from quarter to quarter, has decelerated since peaking in the second quarter of 2005.

Even though the National Association of Realtors (NAR) still predicts existing homes will see appreciation of 5.3 percent during 2006, that is less than half the 12.1 percent experienced on average last year. This means things are, indeed, slowing down. It does not mean we are headed for disaster.

In fact, the NAR economists are agreeing that recent interest rate hikes have slowed home sales, but feel that this is simply another sign of a soft landing for the housing sector which remains at historically high levels. In other words, if you are holding your breath waiting for the bubble to burst, it may be a while.

The bottom line is that an investment in Atlanta real estate appears not only to be safe, but more than that, one which is likely to be worth more in the future than it is today. That's good news for a metro area expected to house over six million residents by 2030.