US home prices may be high, but the party may be over sooner than you think.
A new report finds that more than 50 counties across the country are at risk of a housing market meltdown.
It’s a dream come true for first-time buyers hoping for a bargain, but a nightmare for current homeowners enjoying high property values.
According to a study by real estate data firm Attom, states like California, New Jersey and Illinois have the largest counties that could see prices fall.
What drives this? The usual suspects – rising foreclosures, underwater mortgages and rising unemployment rates.
“The housing market boom continues to gather momentum. However, some markets are showing signs of potential volatility,” said Attom CEO Rob Barber.
Attom analyzed data from 600 US counties, noting major hotspots such as the New York and Chicago metro areas, as well as large parts of California.
Of the 51 most vulnerable counties, 24 were in these regions, including Brooklyn, Staten Island and The Bronx in New York — and four nearby New Jersey counties like Essex and Union. Midwestern counties like Cook in Illinois and Lake in Indiana also landed on the danger list, along with a dozen counties scattered across California from Butte in the north to Riverside in the south.
Meanwhile, pandemic housing hotspots in the Sun Belt like Fort Worth and Tampa are already feeling the burn, with home values sliding as more properties hit the market.
Austin, Texas, and Cape Coral, Florida, took the biggest hits, while real estate in Lakeland and Crestview, Florida, is also down.
In Florida, the apartment market is in full crisis mode. Landlords, looking to unload their properties, are slashing prices – sometimes by nearly 40% – to avoid being stuck with massive repair bills. Those high costs come after state legislation forced condo owners to address long-neglected maintenance issues following the 2021 Champlain Towers collapse in Surfside, which killed 98 people.
Some owners are seeing nearly half a million dollars disappear from their asking prices, creating what some realtors are calling the worst real estate disaster in decades.
For buyers, there is some relief in these softer markets, but don’t get too comfortable.
The average down payment is now $67,500, and in some US cities it’s even higher, crossing the $400,000 mark.
“With the housing market still facing challenges, it is essential to closely monitor regions where leading indicators suggest a higher likelihood of issues,” Barber warned.
Down payments have also increased in percentage terms, with the typical buyer receiving over 18.6% of the purchase price in June, up from 15% last year.
Elevated mortgage rates are prompting buyers to put down more cash, trying to ease the financial blow. The housing market may be booming right now, but storm clouds are gathering on the horizon.
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