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40 Cities With a Housing Bubble That’s About To Burst

Andrew DePietro

For most people, the housing crisis of 2008 is still a recent and painful memory of precisely how damaging a housing crisis can be. When housing markets aren’t working, it’s much harder for people to invest in their future and build a home for their families.

There are now some troubling signs that many American cities could be in danger of another housing crisis, according to a study from GOBankingRates. The study took a look at the 175 biggest U.S. cities and analyzed the percentage of mortgages that have negative equity — meaning the home is ultimately worth less than the total cost of the mortgage, also referred to as being “underwater” on the mortgage — along with vacancy, delinquency and foreclosure rates, scoring each category to determine the cities most in danger of a housing crisis.

Last updated: April 8, 2019

40. Tulsa, Oklahoma

  • Percentage of mortgages underwater: 10%
  • Median home value: $120,600

Tulsa is the first on the list; while better off than the other 39 cities, its housing figures aren’t something to boast about. Tulsa’s rate of homes with negative equity is higher than the U.S. rate of 8.2%. And its rate of foreclosures is also higher than the national average: 1 foreclosure in every 1,778 homes versus 1 in 2,471 homes for the U.S. overall.

39. Bakersfield, California

  • Percentage of mortgages underwater: 11.8%
  • Median home value: $241,200

Located in the interior of California, Bakersfield has an above-average proportion of homes that have negative equity. But what’s worse is the city’s foreclosure rate. With 1 foreclosure in every 1,016 homes, Bakersfield’s foreclosure rate is more than double the average rate for the nation. 

38. Tallahassee, Florida

  • Percentage of mortgages underwater: 11.1%
  • Median home value: $184,700

Tallahassee is one of a number of Florida cities to make the final list. Fortunately, most of them are ranked lower on this list of cities most in danger of a housing crisis.

In Tallahassee, 1 in 9 homes has negative equity, and there’s 1 foreclosure in every 1,775 homes, which is on the higher side of the U.S. average.

37. Milwaukee

  • Percentage of mortgages underwater: 15.7%
  • Median home value: $121,600

Wisconsin’s largest city has faced similar struggles to other formerly industrial Midwestern towns. As industries closed or moved out, the city had to adjust, and the 2000s housing crash made this transition even tougher.

About 1 in 6 homes is underwater in Milwaukee. And, although home values are projected to increase 5.8% within the next year, Milwaukee’s median home value is more than $100,000 below the national average.

36. Savannah, Georgia

  • Percentage of mortgages underwater: 13.9%
  • Median home value: $136,000

Georgia’s major port city of Savannah is afflicted by negative equity and also high vacancy rates. The city’s homeowner vacancy rate of 3.2% is almost double the national rate, while its rental vacancy rate of 7.1% is a full percentage point higher than the U.S. rate overall.

35. Memphis, Tennessee

  • Percentage of mortgages underwater: 13.4%
  • Median home value: $85,800

The rate of homes with negative equity in Memphis is more than 1 1/2 times the prevailing national rate of 8.2%. The good news is that Memphis’ foreclosure rate of 1 in every 2,223 homes is only a little off from the U.S. average of 1 in 2,471 homes.

34. Miami

  • Percentage of mortgages underwater: 10%
  • Median home value: $339,700

Miami’s median home value is over $100,000 more than the national median home value. However, that doesn’t prevent the city from having a comparatively high foreclosure rate of 1 in 1,273 homes — just shy of double the rate for the country overall.

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33. Aurora, Illinois

  • Percentage of mortgages underwater: 11.8%
  • Median home value: $185,400

Aurora is a large suburb west of Chicago, next to Naperville. Aurora’s most chilling statistic is its foreclosure rate. With 1 foreclosure in every 850 homes, the city has the third-highest rate in the study.

32. Lansing, Michigan

  • Percentage of mortgages underwater: 16.9%
  • Median home value: $87,900

Michigan’s state capital suffers from double the rate of underwater homes compared to the U.S. overall. Its foreclosure rate is higher than the national average, with 1 foreclosure in every 1,772 homes — or 0.056% versus 0.04% for the country overall.

31. New Orleans

  • Percentage of mortgages underwater: 13.6%
  • Median home value: $181,800

New Orleans’ housing market could be showing signs of trouble as nearly 1 out of every 7 mortgages is underwater. Another disconcerting fact is that 2.2% of homes are delinquent on their mortgages, which is double the national rate of 1.1%.

30. Miami Beach, Florida

  • Percentage of mortgages underwater: 14.5%
  • Median home value: $377,600

Offshore from the city of Miami proper lies Miami Beach. Home values here have declined by 1.4% in the last year, according to Zillow, and they’re projected to rise only 2.1% in the coming year. Compare that with the projected increase of 5.1% for U.S. home values overall.

Miami Beach is in worse shape than Miami, with 14.5% of homes having negative equity versus 10% of Miami’s homes. Homeowner vacancy is also a major problem. Miami Beach has a homeowner vacancy rate of 3.5%, which is more than double the average rate in the country.

29. St. Louis

  • Percentage of mortgages underwater: 14.7%
  • Median home value: $119,600

The Gateway to the West has been struggling a bit in recent years, not unlike similar Midwestern cities that used to be much larger in the past. As such, St. Louis housing is a mixed bag. On the one hand, foreclosures aren’t a huge problem — the foreclosure rate of 1 in 2,453 homes is close to the U.S. average. However, much of the city’s housing is unoccupied. St. Louis has a very high homeowner vacancy rate of 4%.

28. Jacksonville, Florida

  • Percentage of mortgages underwater: 11.2%
  • Median home value: $177,200

Jacksonville is the largest city in Florida, yet it suffers from a high foreclosure rate. Where the U.S. average is 1 foreclosure in every 2,471 homes, the foreclosure rate in Jacksonville is 1 in 1,055 homes. Also, 1 in 9 homes has negative equity.

27. Mobile, Alabama

  • Percentage of mortgages underwater: 16.1%
  • Median home value: $120,500

Mobile is certainly cheaper to live in than most other cities. However, Mobile’s housing leaves much to be desired. About 1 in 6 homes with a mortgage has negative equity. Additionally, 11.9% of rental units are unoccupied, giving Mobile the fourth-highest rental vacancy rate in the study.

26. Little Rock, Arkansas

  • Percentage of mortgages underwater: 11.5%
  • Median home value: $140,400

Arkansas’ capital city has some average to higher-than-average rates of underwater homes (11.5%) and foreclosures (1 in 1,948 homes). But it’s the city’s vacancy rates that stand out — and not in a good way.

A high proportion of Little Rock housing remains unoccupied. The city’s homeowner vacancy rate of 3.4% is exactly double the national average rate. Meanwhile, its rental vacancy rate is the highest in the study, with 15.8% of rental units lying vacant.

25. Joliet, Illinois

  • Percentage of mortgages underwater: 15.5%
  • Median home value: $143,100

Around 1 in 6 homes in Joliet are underwater on their mortgages, pointing to some potentially tough times on the horizon. It doesn’t help at all that Joliet’s foreclosure rate of 1 in 921 homes is one of the worst in the study.

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24. Syracuse, New York

  • Percentage of mortgages underwater: 16.8%
  • Median home value: $87,200

Located in upstate New York, Syracuse is a college town suffering from housing issues. Approximately 1 in 6 homes are underwater on their mortgages. It’s understandable considering Syracuse’s median home value is more than $150,000 below the national median home value of $226,300.

23. Norfolk, Virginia

  • Percentage of mortgages underwater: 20.6%
  • Median home value: $189,500

Norfolk is part of the Virginia Beach-Norfolk-Newport News metro area, which is facing various housing troubles. More than one-fifth of Norfolk homes are underwater on their mortgages. Although foreclosures aren’t bad, vacancy isn’t good, with 3% of owner-occupied homes lying vacant compared with the 1.7% homeowner vacancy rate for the whole country.

22. Hampton, Virginia

  • Percentage of mortgages underwater: 19.9%
  • Median home value: $167,400

Hampton is just across the James River from Norfolk, and it’s also facing housing issues similar to those in other cities around the metro area. Hampton’s negative equity rate of 19.9% is only a little lower than Norfolk’s; however, the former’s median home value is less than the latter’s. Rental vacancy in Hampton is worse than in Norfolk as well.

21. Chicago

  • Percentage of mortgages underwater: 21.4%
  • Median home value: $228,900

America’s Second City — now actually the third largest — isn’t doing so well when it comes to housing. It’s a bit worrying to see a city like Chicago, which ranks behind only New York and Los Angeles in terms of population, suffer from a negative equity rate of 21.4% — more than 2 1/2 times the national rate. In addition to that, Chicago’s foreclosure rate is high, especially for such a major city: There’s 1 foreclosure in every 1,449 homes, compared with 1 in 2,471 for the U.S. overall.

20. Newport News, Virginia

  • Percentage of mortgages underwater: 19.2%
  • Median home value: $179,400

Another Virginia city from the same region makes the list. Bordering Hampton to the west and across the James River from Norfolk and Virginia Beach, Newport News is afflicted with a high proportion of homes with negative equity.

With 1 foreclosure in every 1,596 homes, the city’s foreclosure rate is higher than in Hampton or Norfolk. Rental vacancy is also a problem, with 9.4% of rental units lying vacant.

19. Rockford, Illinois

  • Percentage of mortgages underwater: 21%
  • Median home value: $85,900

About 1 in 5 Rockford homeowners has a mortgage with negative equity at present. Home values, which rose 3.4% over the last year, are increasing sluggishly. They’re projected to rise 4.4% within the next year, compared with 5.1% for the U.S. overall.

18. Philadelphia

  • Percentage of mortgages underwater: 13.3%
  • Median home value: $160,700

The City of Brotherly Love suffers from a foreclosure rate of 1 in 899 homes, which is quite high for such a large city. Negative equity is also a problem, with 13.3% of Philadelphia homes underwater. That’s more than 1 1/2 times the U.S. average of 8.2%.

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17. Macon, Georgia

  • Percentage of mortgages underwater: 20.3%
  • Median home value: $78,700

More than one-fifth of homes with a mortgage have negative equity in Macon. To add to the city’s housing troubles, more than 10% of its rental units are unoccupied, earning it one of the highest rental vacancy rates in the study.

16. Akron, Ohio

  • Percentage of mortgages underwater: 20.6%
  • Median home value: $67,400

The city of Akron is facing relatively high vacancy rates, with 2.3% of homes going unoccupied and 7.1% of rental units without renters. But the city’s worst statistic is the number of homes with negative equity, which at 20.6% is equal to more than one-fifth of its housing.

15. Columbus, Georgia

  • Percentage of mortgages underwater: 22.2%
  • Median home value: $94,200

Columbus has a higher proportion of homes that are underwater on their mortgages than the other Georgia city to make the list, Macon. On top of that, Columbus also has a higher delinquency rate: 2.1% versus only 1.5% in Macon and 1.1% for the U.S. overall.

14. New Haven, Connecticut

  • Percentage of mortgages underwater: 19.7%
  • Median home value: $174,100

New Haven is one of three cities in Connecticut to rank among the top 40 cities most in danger of a housing crisis. Nearly one-fifth of homes in New Haven have negative equity, and while the city’s foreclosure rate isn’t bad, its delinquency rate of 3% is almost triple the national rate. Additionally, New Haven’s median list price of $179,900 is more than $50,000 above its median sale price of $121,900, implying that prices have to be lowered in order to sell.

13. Toledo, Ohio

  • Percentage of mortgages underwater: 24.7%
  • Median home value: $69,700

Toledo’s rate for homes with negative equity is quite high when compared to the rest of this list and the national average of 8.2%. Toledo’s foreclosure rate is also troubling, with 1 foreclosure in every 1,423 homes, whereas the U.S. overall suffers from 1 foreclosure in every 2,471 homes.

12. Birmingham, Alabama

  • Percentage of mortgages underwater: 26.5%
  • Median home value: $145,400*

Birmingham’s 26.5% of underwater mortgages is more than triple the rate of the country overall, though Alabama’s capital city of Montgomery actually fares worse in this regard. Another area where Birmingham housing suffers is in its rental vacancy rate, which at 9% is far above the national average of 6.1%.

*The study used home values in the metro area because city-level data was unavailable.

11. Columbia, South Carolina

  • Percentage of mortgages underwater: 14.6%
  • Median home value: $134,000

Columbia, the capital of South Carolina, suffers from the highest foreclosure rate in the study: 1 in 796 homes. And its delinquency rate of 2.1% is nearly double the national average of 1.1%.

Another worrying figure for Columbia is its homeowner vacancy rate. At 3.6%, Columbia’s rate is more than double the U.S. rate of 1.7%.

10. Montgomery, Alabama

  • Percentage of mortgages underwater: 28.2%
  • Median home value: $83,100

Well over a quarter of Montgomery homes are underwater on their mortgages. Alabama’s capital city has a better foreclosure rate than Birmingham. But with 1 in 1,772 homes in foreclosure, Montgomery’s foreclosure rate is far above the U.S. average.

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9. Dayton, Ohio

  • Percentage of mortgages underwater: 27.6%
  • Median home value: $52,500

Like many cities in Ohio, Dayton has suffered from deindustrialization and gotten poorer over the years. Although this makes homes cheaper — the current median list price is only $67,900 — it brings the value of homes down too, hurting homeowners who have lived in their houses for years or even decades. And it shows in the numbers, as 27.6% of homeowners have mortgages with negative equity.

8. Fayetteville, North Carolina

  • Percentage of mortgages underwater: 26.8%
  • Median home value: $108,100

Fayetteville is located in central North Carolina and offers benefits such as a cheaper-than-average cost of living. However, with 1 in 4 mortgages underwater and 4.4% of homes going unoccupied, Fayetteville is a city that could be facing a housing crisis.

7. Cleveland

  • Percentage of mortgages underwater: 25.9%
  • Median home value: $55,900

With 1 in 832 homes in foreclosure, Cleveland has the second-highest foreclosure rate in the study. More alarming is that over a quarter of Cleveland’s homes have negative equity. Cleveland’s median home value of $55,900 is four times less than the U.S. median of $226,300, according to Zillow.

6. Paterson, New Jersey

  • Percentage of mortgages underwater: 24.7%
  • Median home value: $253,100

Nearly a quarter of homeowners in Paterson have mortgages with negative equity, which is more than three times the rate of underwater homes for the U.S. overall. Making mortgage payments is a problem too, as Paterson suffers from a delinquency rate of 3.6% — more than three times the national average.

5. Hartford, Connecticut

  • Percentage of mortgages underwater: 22.4%
  • Median home value: $130,900

Hartford has a very high homeowner vacancy rate at 4.3%, which is over 2 1/2 times the vacancy rate for the U.S. at large. In terms of homes for rent, Hartford also suffers from high vacancies, with 9.2% of rental units lying unoccupied. On top of that, Hartford’s delinquency rate is triple the average national rate.

4. Baltimore

  • Percentage of mortgages underwater: 26.5%
  • Median home value: $119,200

Baltimore’s 26.5% negative equity rate for mortgages is the seventh-highest in the study and equivalent to more than a quarter of homes being underwater on their mortgages. In addition, Baltimore’s homeowner vacancy rate of 4.4% is 2 1/2 times the U.S. rate.

3. Bridgeport, Connecticut

  • Percentage of mortgages underwater: 26.9%
  • Median home value: $176,200

Connecticut has fallen on hard times in recent years, with its finances in trouble and undermined by debt, according to the Washington Post. Bridgeport is one of Connecticut’s largest cities, and it faces serious housing obstacles. With 26.9% of homes underwater on their mortgages, Bridgeport’s rate of negative equity is the fifth worst in the study. The city’s high delinquency and foreclosure rates are not inviting to people looking for the best place to buy their first home.

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2. Detroit

  • Percentage of mortgages underwater: 34.4%
  • Median home value: $161,300*

Zillow doesn’t provide home value data for the city of Detroit proper. However, even the Detroit-Warren-Dearborn metro area’s median home value of $161,300 is still well below the national average of $226,300. With 34.4% of homes having negative equity, Detroit possesses the highest rate of underwater homes in the study.

*The study used home values in the metro area because city-level data was unavailable.

1. Newark, New Jersey

  • Percentage of mortgages underwater: 27.9%
  • Median home value: $252,000

Newark has high rates of vacancy for both houses and rental units at 5.2% and 9.5%, respectively, versus 1.7% and 6.1% for the U.S. overall. Lateness on mortgage payments is a major issue in Newark as well, with 6.4% of homes being delinquent — equivalent to almost six times the national delinquency rate.

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Cities in Danger of a Housing Crisis

There’s no guarantee that any of these cities are headed for a major crisis, but there are clearly many housing markets in the U.S. starting to show cracks.

The category that appears to correlate the most with the final ranking was, unsurprisingly, the percentage of mortgages that are currently underwater. Compared to the other places on the list, nine of the 10 worst cities had the highest percentages of mortgages with negative equity. The No. 2 worst city — Detroit — had the highest percentage of mortgages with negative equity, at 34.4%.

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Joel Anderson contributed to the reporting for this article.

Methodology: GOBankingRates determined which places are most in danger of a housing crisis by first compiling a list of 175 largest U.S. cities by the number of households, sourced from the Census Bureau’s 2017 American Community Survey. From there, each city was analyzed based on the following factors: (1) percentage of homes that have a mortgage with negative equity (aka “underwater”) and (2) mortgage delinquency rate, both sourced from Zillow’s February 2019 index; (3) homeowner vacancy rate and (4) rental vacancy rate, both sourced from the Census Bureau’s 2017 American Community Survey; and (5) foreclosure rates, sourced from RealtyTrac’s February 2019 data. In order to qualify to make the final list, cities must have rates of negative equity in excess of 8.2%, which is the national average rate of homes that have mortgages with negative equity. Along with this qualification, each factor was scored and added together, and the final cities were ranked. All research used to conduct this study was compiled and verified on March 26, 2019.

This article originally appeared on GOBankingRates.com: 40 Cities With a Housing Bubble That’s About To Burst