CNNMoney reports that according to a real estate research company, the medium home is overpriced by an average of 14%. With no surprise, towns in California dominate the top 10 list:

Santa Barbara-Santa Maria CA (86%)
Naples FL (72%)
Modesto CA (71%)
San Diego CA (70%)
Riverside-San Bernardino CA (64%)
Stockton CA (64%)
San Jose CA (61%)
Sacramento CA (59%)
Vallejo-Fairfield CA (58%)
Los Angeles-Anaheim CA (57%)

Each quarter, Local Market Monitor, which provides research to the real estate industry, assesses 100 markets, comparing selling prices to "equilibrium" values. Company president Ingo Winzer bases those values on local economic and population growth, construction costs, vacancy rates, household income in the area and interest rates.

The number of overpriced markets in the first quarter, defined as having a median home price more than 15 percent higher than equilibrium, fell by two to 38. In the prior quarter, the number of overvalued markets had climbed to 40 from 37.

Winzer says that 56 of the 100 markets he covers are now fairly priced, up from 54 last quarter.

The median home, however, is still overpriced by an average of more than 14 percent, Winzer judges, and homes in many markets are still way too high. This matters because those markets have much more potential for the kind of steep decline that could be disastrous for homeowners - and the local economy.