I am not getting around this concept

If the stock market is overvalued, an asset that appears to be fairly or even undervalued in relation to an equity index may also be overvalued.

The houses in your neighborhood are identical, and are selling for $800,000 when they’re really worth $500,000. Your house just sold for $700,000: undervalued relative to the market (the index), but still overvalued by $200,000.