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Cities in the Crosshairs—Is a Housing Crisis Ahead?

Many American cities may be in danger of a housing crisis, according to a study from GOBankingRates. Using data from Zillow and the Census Bureau’s 2017 American Community Survey, GOBankingRates compiled a list of 175 largest U.S. cities by the number of households, and examined the percentage of homes with mortgage with negative equity, mortgage delinquency rate, homeowner vacancy rate, rental vacancy rate, and foreclosure rates to determine which cities may be the closest to a housing crisis.

According to Zillow, the median U.S. home value increased by 7.2 percent increase from a year earlier and data from CoreLogic indicates serious delinquency rates on home mortgages were the lowest in more than 12 years, but in these cities examined by GOBankingRates, delinquency is a rising problem. Topping the list is Newark, New Jersey. In this city, with a median home value of $252,000, 27.9 percent of homes are currently underwater, and according to the study, lateness is a major issue. In Newark, 6.4 percent of homes are delinquent, six times the national average.

Taking the second spot, Detroit sees a similar story. In the Motor City, 34.4 percent of homes are currently underwater, and the median home value at the Detroit-Warren-Dearborn metro-area level is $161,300, far below the national median of $226,300.

Other cities included in GOBankingRates included Bridgeport, Connecticut; Baltimore; Hartford, Connecticut; Paterson, New Jersey; Cleveland; Fayetteville, North Carolina; Dayton, Ohio; and Montgomery, Alabama.

Not included in the top 10 is the West Coast, where, despite not facing an imminent housing crisis, housing is becoming increasingly affordable. According to Zillow, Homeownership became less affordable across the country in 2018 while renting became marginally more affordable.

"Finding that balance where housing costs leave a comfortable amount of spending money is tricky, especially when the prices of life's non-housing essentials also vary widely by market," said Skylar Olsen, Zillow Director of Economic Research.

According to the report, the outlook is grim for those in Los Angeles considering California's substantial income tax rates, which cuts into income left over for variable cost-of-living expenses like transportation, child care, and education.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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