Nationwide, only 87 markets are in the overvalued category, according to a newly released 2010 report compiled by IHS Global Insight and PNC Financial Services.

That means 242 of the 299 largest U.S. housing markets are selling for prices that even bankers think are less than fair market value. The judgment is based on a comparison of median home prices, local interest rates, population densities, and income, plus historic premiums or discounts.

Here are the 10 most undervalued areas, according to the study:

Las Vegas, -41.4 percent

Vero Beach, Fla., -39.8 percent

Merced, Calif., -37.7 percent

Cape Coral, Fla., -36.8 percent

Houma, La., -34.6 percent

Port St. Lucie, Fla., -33.3 percent

Warren, Mich., -32.3 percent

Vallejo, Calif., -31.9 percent

Modesto, Calif. -31.8 percent

Stockton, Calif., -31.8 percent

Source: CNNMoney, Les Christie (01/27/2010)