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These Cities Are Most in Danger of a Housing Crisis, Study Finds

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.

For many American cities, there are now some troubling signs that they could be in danger of a housing crisis striking in the future, according to a study from GOBankingRates. The study took a look at information such as 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 come up with a final ranking to determine which cities are in danger of a housing crisis.

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. Its 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: one foreclosure in every 1,778 homes versus one in every 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 one 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 the list of cities most in danger of a housing crisis.

One in every nine homes has negative equity, while there’s one 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 Midwestern, former industrial towns. As industries closed or moved out, the city had to adjust, while the 2000s housing crash made this transition even tougher.

About one in six 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 over $100,000 less than the U.S. national median.

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 one in every 2,223 homes is only a little off from the U.S. average of one in every 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 one in every 1,273 homes — just shy of double the rate for the country overall.

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 one home in every 850 homes in foreclosure, 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 rate of foreclosure is higher than the national average, with one foreclosure in every 1,772 homes, or 0.056% versus 0.040% 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 one out of every seven mortgages is currently underwater.  Another disconcerting fact is that 2.2% of homes are delinquent on their mortgage, 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 a major problem, with Miami Beach having a homeowner vacancy rate of 3.5%, which is more than double the average rate in the rest of 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 very mixed bag: On the one hand, foreclosures aren’t much of a problem, with one foreclosure in every 2,453 being very near the U.S. average. However, much of the city’s housing is unoccupied, with St. Louis having 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 one foreclosure in every 2,471 homes, in Jacksonville the foreclosure rate is one home in every 1,055. Also, one in every nine 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. One in six homes with a mortgage has negative equity. In the meantime, 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 homes underwater (11.5%) and foreclosures (one in every 1,948 homes). But it’s the city’s vacancy rates that stand out, and not in a good way.

A high proportion of housing remains unoccupied. Little Rock’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 one in every six homes in Joliet is currently underwater on its mortgage, pointing to some potentially tough times on the horizon. It doesn’t help at all that Joliet’s foreclosure rate of one in every 921 homes is one of the worst in the study.

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, but also one suffering from housing issues. Approximately one in six homes is underwater on its mortgage. It’s understandable considering Syracuse’s median home value is over $150,000 less than 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, an area that is facing various housing troubles. More than a fifth of Norfolk homes are underwater on their mortgage. Although foreclosures aren’t bad, vacancy isn’t good, with 3% of owner-occupied homes lying vacant, compared with a 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 too is facing similar housing issues to Norfolk and other cities in the metro area. Hampton’s negative equity rate of 19.9% is only a little less 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 such as Chicago, which ranks behind only New York and Los Angeles in terms of population, suffer from a negative equity rate of 21.4%, or more than 2 1/2 times the national rate. Added to that, Chicago’s rate of foreclosure is also high, especially for such a major city: There’s one foreclosure in every 1,449 homes, compared with one in every 2,471 for the U.S. overall.

20. Newport News, Virginia

  • Percentage of Mortgages Underwater: 19.2%
  • Median Home Value: $179,400

Again, another Virginia city makes the list from the same region. 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 one 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 one out of every five homeowners in Rockford 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 one home in every 899 being in foreclosure, which is quite high for such a large city. Negative equity is also a problem, with 13.3% of homes underwater. That’s more than 1 1/2 times the U.S. average of 8.2%.

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 trouble, more than 10% of its rental units are unoccupied, earning it one of the highest rental vacancy rates in the study.

Of course, Macon is also an affordable place to live in the U.S. In fact, it’s one of several U.S. cities where you can live on less than $50,000 a year.

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 stat 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 mortgage than the other Georgian 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 have negative equity, and while its foreclosure rate isn’t bad, its delinquency rate (3%) is almost triple the national rate. Meanwhile, New Haven’s median listing price of $179,900 is over $50,000 higher than 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

Like its fellow Ohio city Akron, Toledo’s rate for homes with a negative equity mortgage 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 one foreclosure in every 1,423 homes, whereas the U.S., overall, suffers from one 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 mortgages underwater is more than triple the rate of the country overall, though Alabama’s capital, Montgomery, is actually 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%.

*Metro area home value; city-level 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 — one home in every 796. And with a delinquency rate of 2.1%, it’s more than double the national average of 1.1%.

Another worrying figure for Columbia is the 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 mortgage. Alabama’s capital has a better foreclosure rate than Birmingham, but with one in every 1,772 homes in foreclosure, Montgomery’s foreclosure rate is far above the U.S. average.

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 has gotten poorer over the years. Although this makes homes cheaper — the current median listing price is only $67,900 — it brings the value of homes down too, hurting homeowners who’ve 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 one in four mortgages underwater and 4.4% of homes going unoccupied, it is a city that could be facing a housing crisis.

7. Cleveland

  • Percentage of Mortgages Underwater: 25.9%
  • Median Home Value: $55,900

With one in every 832 homes in foreclosure, Cleveland has the second-highest foreclosure rate in the study, behind Columbia. More alarming is that more than a quarter of Cleveland’s homes have negative equity. Cleveland’s median home value of $55,900 is four times less than the current 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 and 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, 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. And on top of all that, Hartford’s delinquency rate is triple the national average 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, equivalent to more than a quarter of homes being underwater on their mortgage. Meanwhile, Baltimore’s homeowner vacancy rate of 4.4% is 2 1/2 times the U.S. national 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 mortgage, 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.

2. Detroit

  • Percentage of Mortgages Underwater: 34.4%
  • Median Home Value: $161,300*

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

*Metro area home value; city-level unavailable

1. Newark, New Jersey

  • Percentage of Mortgages Underwater: 27.9%
  • Median Home Value: $252,000

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

Cities in Danger of a Housing Crisis

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

And the category that appears to correlate the most with the final rankings was, unsurprisingly, the percentage of mortgages that are currently underwater. Nine of the 10 highest percentages of mortgages with negative equity were among the top 10 cities in the study, and with the No. 2 worst city — Detroit — having the highest rate at 34.4%.

More on Real Estate

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 here, each city was analyzed based on the following factors: (1) percentage of homes with mortgage with negative equity (also known as “underwater”), (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; (5) foreclosure rates, sourced from RealtyTrac’s February 2019 data. In order to qualify to make the final list, cities had to have rates of negative equity in excess of 8.2%, which is the current U.S. national average rate of homes with mortgages with negative equity. Along with this qualification, each factor was scored, added together and the cities ranked.

This article originally appeared on GOBankingRates.com: 40 Cities in Danger of a Housing Crash This Year — Is Yours on the List?