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10 cities in danger of a housing crash this year

Jade Scipioni

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, 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.  

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1. Newark, 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

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

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

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.

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