Detroit is now the most overpriced housing market in the United States, edging out Atlanta, which held the spot for more than a year. Homes in the Detroit metro area are 40.79% overvalued, while housing premiums in Atlanta are 40.37% overvalued, according to researchers at Florida Atlantic University and Florida International University.

Detroit's rise as the most overvalued housing market in the country is likely due to new household formation, said Ken H. Johnson, a real estate economist in FAU's College of Business.

"While population growth is relatively stagnant in the area, people are starting to leave their current households to form new ones, placing pressure on a housing market that simply does not have enough units to support this new demand," said Johnson.