10 US Cities at Risk of a Housing Downturn
The US housing market has been steady for several years now, with home prices climbing year after year. However, the recent pandemic brought certain changes, and while it’s almost certain there won’t be a serious market crash, several states have been experiencing significant shifts in their numbers.
GOBankingRates has evaluated over 500 cities, and Florida came out as the unlucky winner with the highest rates of underwater mortgages and foreclosures, followed closely by Illinois. Here are the cities whose housing markets have the highest chances of experiencing a downturn.
1. Fort Myers, Florida
With the median list price of $249,999, Fort Myers experienced a 1.4% drop in prices in the last two years. The percentage of underwater mortgages in Fort Myers is 6.9%, comparable to the national average. However, the number of days a home lingers on the market is 105 days – much longer than the nationwide average of 66 days. In terms of foreclosure, however, the situation in Fort Myers is not that unfavorable, with one in every 1,921 homes ending up foreclosed.
2. Peoria, Illinois
Peoria has the highest chances of its housing market turning ugly. With a 16% drop in prices over the last two years, the median home list price is $124,450. The percentage of underwater mortgages is also alarmingly high – 21%, which is more than double the national average. While not the highest on our list, its foreclosure rate of one in every 932 homes is also problematic.
3. Portsmouth, Virginia
The unflattering title of the city with the highest foreclosure rate goes to Portsmouth, Virginia. Here, one in every 730 homes ends up getting foreclosed. At 19.4%, its rate of underwater mortgages is also high compared to that of other cities on this list. The median list price in Portsmouth is $165,700 – a 1.5% increase over the past two years.
4. Miami Beach, Florida
Miami Beach, a popular resort, made this list because houses here spend the most time on the market – 225 days on average. A 5% drop in prices over the last two years is another worrisome statistic, mainly because it’s in stark contrast with the rising home prices across the US.
The median list price of $499,000 may be the silver lining in this case, along with a low rate of foreclosures, with just one in 2,374 homes getting foreclosed. It seems that Miami might not be in such big trouble and that it could benefit from its real estate agents simply employing better tactics or real estate software.
5. Waterbury, Connecticut
Being close to New York City didn’t bring much to Waterbury in the last couple of years. It has the highest percentage of underwater mortgages of all the cities listed in the research – 29.4%. Even though the median list price has risen 11.9% and is currently standing at $125,000, there are still reasons to worry. Luckily, the number of foreclosures is moderate – one in every 1,159 homes gets seized and sold to set off outstanding mortgage payments.
6. Sarasota, Florida
Houses for sale in Sarasota currently have a relatively high median list price – $359,000, which is a 5.6% increase from 2019. Underwater mortgages stand at 4.5%. One in every 1,520 homes gets foreclosed. The time a house spends on the market waiting for the buyer is similar to Fort Myers, merely a week shorter.
7. Dayton, Ohio
At first glance, Dayton, Ohio, is doing just fine. The prices have increased 16.5% since 2019, and the houses are still affordable at the median list price of $67,000. However, the percentage of underwater mortgages is 27.6% – the second-highest on our list. What’s more, the foreclosure rate here is higher than the national average.
8. Fort Lauderdale, Florida
The median list price of a house in Fort Lauderdale is currently $499,900, 0.2% lower than two years ago. The foreclosure rates in this city on Florida’s southeastern coast are similar to those in Sarasota. Still, the number of days houses stay on the market in Fort Lauderdale is 133 days, which is more than double the national average.
9. Valdosta, Georgia
Valdosta’s low foreclosure rates may make someone wonder why it made this list, considering that only one in 3,304 homes ends up getting foreclosed. But if we look at other relevant numbers, the picture looks a lot less bright. The prices in Valdosta fell 6% last year, and the median list price is $154,900. This in itself wouldn’t be too problematic if it weren’t for the double-digit underwater mortgage rate of 22.7%.
10. West Palm Beach, Florida
West Palm Beach seems to be suffering from a high foreclosure rate: One in every 1,297 homes gets seized from defaulting mortgagors. Home prices have gained 1.4% and currently stand at $298,000. The average time a home stays on the market in this city north of Miami is 119 days.
The Bottom Line
The housing markets we have reviewed here struggle with high rates of foreclosure and underwater mortgages, as well as sluggish or even negative home price growth. However, looking at the broader picture, we can see that the US housing market might, in fact, be in overdrive as millions of Millennials have reached first-home buying age and are looking to settle somewhere without having to go through another tenant screening procedure.