U.S. home values are at record highs, but that could all change soon, according to a new report.
A collapse in housing prices is a risk in more than 50 US counties, according to researchers from Real estate data company Attom was found.
This is great news for first-time car buyers, but a blow to existing car owners who benefit from high prices.
Three states – California, New Jersey and Illinois stood out as an at-risk state. It had the most counties where home prices could plummet according to key indicators.
These include a high number of underwater mortgages and foreclosures, as well as higher unemployment. Attom looked at 600 counties across the United States that had sufficient data to analyze.
“The housing market boom continues to gain momentum. However, some markets are showing signs of potential instability,” said Attom CEO Rob Barber.
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“As the housing market continues to face challenges, it is crucial to closely monitor regions where key indicators suggest a higher likelihood of problems,” he said of the report.
The New York City metropolitan area also had a large group of markets at risk.
Metropolitan areas around New York and Chicago, as well as large swaths of California, accounted for 24 of the 51 counties considered most vulnerable.
The counties at highest risk included three in New York City (Kings County, which covers Brooklyn; Richmond County, which covers Staten Island; and Bronx County) and four in the New York City suburbs (Essex, Passaic, Sussex, and Union counties, all in New Jersey).
There are four counties in Illinois: Cook, Kendall, McHenry, and Will, and Lake County in Indiana.
Another 12 were in California: Butte County (Chico), Humboldt County (Eureka), Solano County (outside Sacramento), and Shasta County (Redding) in the northern part of the state.
Additionally, in Central California are Kern County (Bakersfield), Kings County (outside Fresno), Madera County (outside Fresno), Merced County, San Joaquin County (Stockton), and Stanislaus County (Modesto) in Central California.
Two others, Riverside and San Bernardino counties, are in Southern California.
House prices are already falling
Several Sun Belt housing markets that became boomtowns during the pandemic have already faced price corrections.
The number of homes listed for sale in former hot spots like Fort Worth, Texas, and Tampa, Florida, has skyrocketed in recent months.
According to recent data from Redfin, both cities are seeing their values decline year over year.
Austin, Texas, and Cape Coral, Florida, experienced the largest price declines over the past year, according to the American Enterprise Institute’s Housing Center.
Other Florida hot spots, including Lakeland, Tampa and Crestview, are also experiencing a housing crisis as residents try to sell their condos.
Condo owners are cutting prices by as much as 40 percent in an effort to avoid huge repair costs.
Some units have lost nearly half a million dollars off their asking price as safety fears trigger a sell-off in what real estate agents have described as the worst housing crisis in decades.
State legislation enacted following the 2021 collapse of the Champlain Tower South in Surfside, Miame-Dade County, which killed 98 people, means hundreds of thousands of condo owners must now shell out large sums for previously neglected maintenance.
Many could face charges greater than their mortgage payments, triggering a wave of distressed sales.
Homebuyers may want to take advantage of weaker markets as down payments have hit an all-time high.
New Jersey at risk of lower home prices this year, report says
Homebuyers might consider Illinois, where the market is set to soften.
The average down payment for home buyers in the United States is now a staggering $67,500, new data reveals.
High mortgage rates mean home buyers are incentivized to shell out more money up front to soften the blow.
This, coupled with rising home prices, means that down payments in excess of $400,000 are now the norm in some American cities.
Down payments have also increased in percentage terms, according to Redfin’s analysis.
The typical homebuyer paid 18.6 percent of the purchase price for a home in June, the highest level in more than a decade and up from 15 percent last year.
