Even though Gish was my favorite by and large, I think that the single most underrated album of that year was this little gem:
Indeed, Why Do Birds Sing? by the Violent Femmes is one of the most underrated albums of all time. With brilliant production and stellar songwriting competed by Gordon Gano's weird humor and annoying, er, distinctive voice, I rate it as high as anything else they've done. Shame this one always gets overlooked, because songs like American Music, Out the Window, and Used to Be are up there with the best of the Femmes.