10 cities in danger of a housing crash this year
Dolly Lenz Real Estate CEO Dolly Lenz and Dolly Lenz Real Estate Managing Director Jenny Lenz on the state of the housing market.
With Manhattan real estate reporting its longest losing streak in 30 years, and its worst first quarter since the financial crisis, according to Douglas Elliman, it’s no surprise that many cities around the country are in danger of a housing crash this year.
According to a new report released Monday, more than 40 U.S. cities are nipping at the heels of a potential housing crisis especially in “old” Northeast and Midwest cities.
To determine which areas are heading toward a housing crisis, GoBankingRates analyzed data on 175 of the largest U.S. cities.
Researchers then used key factors, including the percentage of homes with mortgages with negative equity (also known as “underwater”), meaning the home is currently worth less than the total cost of the mortgage, from Zillow's latest data, along with city’s mortgage delinquency rate.
Additionally, the personal finance website calculated each area’s homeowner vacancy rate and rental rate using data from the Census Bureau’s 2017 American Community Survey combined with foreclosure rates from RealtyTrac.
To make the list, cities had to have rates of negative equity in excess of 8.2 percent, which is the current the U.S. national average rate of homes “underwater.”
Here are the top 10 cities in the most danger of a housing crash this year.
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1. Newark, New Jersey
Newark cityscape refection along the banks of the Passaic River. Newark is the largest city in New Jersey. Newark is one of largest rail and air hubs in the nation. Newark is known for its glamorous performing arts venues, premium outlet mall, museum …
Percentage of mortgages underwater: 27.9 percent
Median home value: $252,000
According to the report, Newark has high rates of vacancy for both homes and rental units at 5.2 percent and 9.5 percent, respectively, compared to the national average of 1.7 percent and 6.1 percent.
Additonally, its delinquency rate on mortgage payments is almost six times the national average at 6.4 percent.
2. Detroit, Michigan
Aerial with Downtown Detroit skyline in the distance, with a blue sky with puffy fair weather clouds and Windsor, Ontario, Canada in the background, the Detroit River on the left, and a lighthouse, marina, and park in the foreground.
Percentage of mortgages underwater: 34.4 percent
Median home value: $161,300
With 34.4 percent of homes having negative equity, Detroit has by far the highest rate of homes underwater in the study. Additionally, its median home value of $161,300 is well below the national median value of $226,300.
3. Bridgeport, Connecticut
Bridgeport is a historic seaport city in the U.S. state of Connecticut. The largest city in the state, it is located in Fairfield County
Percentage of mortgages underwater: 26.9 percent
Median home value: $176,200
With 26.9 percent of homes underwater and high delinquency and foreclosure rates, Bridgeport is one of many Connecticut cities to make the list this year.
4. Baltimore, Maryland
Downtown Baltimore skyline aerial with Baltimore City Hall in the center and Jones Falls Expressway (I-83) in the foreground.
Percentage of mortgages underwater: 26.5 percent
Median home value: $119,200
As the seventh-highest in the study for underwater mortgages and with homeowner vacancy rate of 4.4 percent, which is two and half times higher than the national rate, Baltimore ranks high on the list this year.
5. Hartford, Connecticut
Hartford is the capital of the U.S. state of Connecticut. Hartford is known for its attractive architectural styles and being the Insurance capital of the United States.
Percentage of mortgages underwater: 22.4 percent
Median home value: $130,900
Hartford not only has a high homeowner vacancy rate at 4.3 percent, which is two and half times the U.S. average, it also has a delinqency rate that is triple the national average rate.
6. Paterson, New Jersey
Paterson is the largest city in and the county seat of Passaic County, New Jersey, United States.
Percentage of mortgages underwater: 24.7 percent
Median home value: $253,100
Nearly a quarter of homeowners in Paterson have mortgages with negative equity.
7. Cleveland, Ohio
Various aerial photos over Cleveland with the city skyline
Percentage of mortgages underwater: 25.9 percent
Median home value: $55,900
Not only is Cleveland's median home value well below the current U.S. average of $226,300, according to Zillow, it also have the second-highest foreclosure rate in the study.
8. Fayetteville, North Carolina
The turnabout on Hay Street passes by a historic location in Fayetteville NC
Percentage of mortgages underwater: 26.8 percent
Median home value: $108,100
One in four mortgages are underwater in Fayetteville.
9. Dayton, Ohio
Downtown Dayton skyline aerial view with a bridge on the right, and with the Great Miami River in the foreground.
Percentage of mortgages underwater: 27.6 percent
Median home value: $52,500
10. Montgomery, Alabama
Downtown Montgomery Alabama AL Skyline Drone Aerial
Percentage of mortgages underwater: 28.2 percent
Median home value: $83,100
More than a quarter of Montgomery homes are underwater on their mortgages.