Disaster Or Buying Opportunity

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Interesting article on Fax News today about housing, particularly in the Northeast. Does any BP'ers living in these areas, see this info as jiving with their local analysis.  

10 Cities In Danger Of A Housing Crash This Year

By Jade Scipioni Published April 08, 2019

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.com 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, along with city’s mortgage delinquency rate from Zillow’s February 2019 index.

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.

1. Newark, New Jersey

Newark is the largest city in New Jersey.

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

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

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 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 triple the national average rate.

6. Paterson, New Jersey

Paterson is the largest city in and the county seat of Passaic County, New Jersey.

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

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

Percentage of mortgages underwater: 26.8 percent

Median home value: $108,100

One in four mortgages are underwater in Fayetteville.

9. Dayton, Ohio

Percentage of mortgages underwater: 27.6 percent

Median home value: $52,500

10. Montgomery, Alabama

Percentage of mortgages underwater: 28.2 percent

Median home value: $83,100

More than a quarter of Montgomery homes are underwater on their mortgages.

Are these underwater mortgages carry over from the housing crisis 10 years ago or are prices falling again?  So what happens during a housing crash to an investor targeting renters.  I think I would be affected if rents go down,

@Jim Cummings Speaking for Newark there are a lot of delinquencies related to the previous crisis. NJ has an incredibly long foreclosure process and I’m sure a lot of of those delinquencies stem from loan modifications of loans from the pre crisis era. There are still neighborhoods with a lot of zombie properties from the bust but there are also a lot of areas which have recovered nicely since the crisis and are thriving. It’s also safe to say that prices in Newark have really only started recovering over the past couple of years (for the same reason we still have so many foreclosures) so it’s probably premature to call an end to bull market. I haven’t experienced anywhere near those vacancy rates in my portfolio so either I’m lucky, good, or their data is garbage.

Also, Gobankingrates.com? Total clickbait site. I saw another article on another clickbait site touting Newark as like the second best city to invest in. I didn’t pop champagne for that article and I’m not gonna start sweating because of this one. Investors everywhere need to proceed with caution and value their deals conservatively and finance them accordingly. No ones market is going to save them if prices turn nationwide and they over leveraged or bit off more than they can chew.

@Jim Cummings

Guess what's on the local news in Hartford?

Hartford Makes List For Best Places To Buy Your First Home | NBC Connecticut

https://www.nbcconnecticut.com/news/local/Hartford-Makes-List-For-Best-Places-To-Buy-Your-First-Home-507804251.html?_osource=mobilesharebar

Either way, it's ********...

I agree with @Allan Szlafrok , anyone can interpret the data anyway they want to get headlines and draw traffic to their website and ads.

Remarkably, this positive news story uses the same website as source for this "credible" info...

I lwould worry more about CT than Newark. Newark has transformed substantially since the turn of the century, and continues to. The neighborhoods with delinquencies will get turned over sooner or later - proximity to NY a huge factor. There’s a lot of demand in that region. You see substantial appreciation of prices.

CT however continues to languish - no jobs, no growth, only taxes compare and exceed NJ. Population continues to decline. Zero increase in home values in most places.  Any foreclosure problems will not go away quickly.

Nice article Shirley. I agree parts of Hartford are improving. 

And I also agree with Allen, it's about local neighborhoods not just numbers in a study or list.

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