Another Top-10 List (with a 50% Bonus) — Cities Most at Risk for a Housing Crisis

Home prices are a function of the interaction of supply and demand.   Just more than a decade ago, the subprime-driven housing bubble imploded sending U.S. median home prices plummeting from $224,350 in June 2006 (on a 12-month moving average basis) to $164,230 as of January 2012 – a 27.8 percent drop.   Since then, most, but not all markets have regained the lost value.  The U.S. today has a $260,360 median in the past 12-months, up 16 percent from the pre-recession peak.

Some markets, however, have surged past the prior pre-bubble peak to lofty levels today.  To see where home values have surged the most, 24/7 Wall Street compiled a ranking of the 15 metros having the greatest increase in home prices today compared to the peak home price pre-recession.  Greeley, Colorado tops the list for the greatest increase in median price, up almost 80 percent.  These ranking were based on data from median home price data covering 123 metros from ATTOM Data Solutions.   The Colorado front range makes up the first three places and four of the top-10.

Unfortunately many of the metro-specific home price increases are not supported by incomes.  The next table shows the ratio of the median home price to household income – each as of 2017.  While Greeley, Colorado topped the list in price gain since the pre-recession peak, it ranks 7th when dividing median price by household income.  This would indicate that much of this increase in home price is driven by rising incomes along with growing demand.    Greeley’s home price to income ratio of 4.75 is not that much greater than the overall 4.03 ratio for the U.S. (based on a 2017 median home price of $247,200 per the National Association of Realtors® and a $61,372 household income as reported by the U.S. Census Bureau).

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Concern arises when home prices rise and incomes do not.  That is the most likely scenario for a housing market implosion.  While being on this list does not imply a downturn today, it does show those metros with the greatest risk of being impacted when the next inevitable downturn takes place.


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