The 13 Riskiest Housing Markets
If your hometown is on this list, the value of your house may be in jeopardy.
By Dave Lindorff
From Kiplinger's Personal Finance magazine, August 2005
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Ripe for a Fall?
These seven areas are also vulnerable to falling housing prices. They are listed in order of risk, with the riskiest first.
San Francisco. How do you make New York look cheap? Easy. Try buying in the City by the Bay. After increases of 13%, 21% and 30% in the past three years, the median home price in San Francisco is $689,000 -- the highest in the nation. The high price of land and tough restrictions on what may be built on that land are major factors. PMI sees a 40% chance of falling property values over the next two years.
Sacramento, Cal. Affordability is a key issue in the hottest market in northern California, where prices have climbed 27% in the past year and an annualized 19% over the past five. A state-budget crisis puts jobs at risk in the Golden State's capital. Odds of a price decline: 40%.
Providence. The New England city that was founded as a home for religious dissenters faces some of the same issues as Boston: no population growth and stagnant job growth. Over the past three years, home prices in Providence have risen at a rate similar to Boston's. PMI puts Providence's housing-price risk at 39%.
Minneapolis-St. Paul. Housing prices in the Twin Cities have climbed an annualized 9% over the past three years. Still, PMI places the odds of a downturn at one in four. With Northwest Airlines, a major area employer, facing problems, job growth and payrolls are stagnating.
Denver. Housing prices in the Mile High City have risen modestly the past four years, including a gain of just 2% over the past year. Job growth has also been moderate. But a concentration of employers in the troubled telecom sector leads to a risk of a home-price downturn, which PMI puts at 21%.
Miami. A surge of buying by retirees, Europeans and South Americans is boosting prices in Miami. Prices skyrocketed 28% over the past year, to $316,000 for the median home. But there's less risk in Miami (PMI rates the chance of a price decline at 18%) than in Fort Lauderdale, just 40 miles to the north, because tourism, services, trade and transportation remain strong.
Tampa-St. Petersburg. The adjoining cities on Florida's Gulf Coast have been popular landfalls for hurricanes of late, but the area is also a popular destination for retirees. Prices haven't risen as high as in Miami or Fort Lauderdale, but the median home price jumped 16% over the past year and an annualized 12% over five years, to $173,000. PMI places the risk of a housing slump at 14%.
--Research: Joan Goldwasser