Worth the risk? Not in these 16 housing markets

Aly J. Yale
The Mortgage Reports contributor

Risky business

If you want a low-risk home purchase, then steer clear of Florida. According to CoreLogic, the Sunshine State claims 10 of the nation’s 16 riskiest housing markets — markets where prices are outpacing incomes and rents are more affordable than mortgages.

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Mini housing bubbles

According to CoreLogic, there are 16 markets with a high risk for housing bubbles. In Florida, these include Deltona-Dayton Beach-Ormond Beach, Fort Lauderdale-Pompano Beach-Deerfield Beach, Jacksonville, Lakeland-Winter Haven, Miami-Miami Beach-Kendall, North Port-Sarasota-Bradenton, Orlando-Kissimmee-Sanford, Palm Bay-Melbourne-Titusville, Tampa-St. Petersburg-Clearwater and West Palm Beach-Boca Raton-Delray Beach.

Outside of Florida, other high-risk areas included Houston-The Woodlands-Sugarland, Texas; Las Vegas-Henderson-Paradise, Nevada; Los Angeles-Long Beach-Glendale, California; Nassau County-Suffolk County, New York; New Orleans-Metairie, Louisiana; and Riverside-San Bernardino-Ontario, California.

“Home prices have appreciated more than 40 percent since January 2012 in these metro areas with the exception of Nassau County-Suffolk County, New York, and New Orleans-Metairie, Louisiana,” CoreLogic reported. “Meanwhile, rent appreciated less than half of the home price growth. All 16 markets are overvalued on the basis of both price-to-income measures and price-to-rent measures.”

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The number of high-risk markets is on the rise, too. Last quarter, CoreLogic listed just 10 risky markets.

“Flipping and fraud activities continue to pick up, signaling more short-term speculation and mortgage fraud, which should be closely monitored,” CoreLogic reported.

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Low-risk markets

CoreLogic also ranked the 10 least risky markets in the country. The Northeast claimed six on the list, including Boston; Bridgeport-Stamford-Norwalk, Connecticut; Cambridge-Newton-Framingham, Massachusetts; Hartford-West Hartford-East Hartford, Connecticut; Pittsburgh; and Worcester, Massachusetts.

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In the South, Little Rock-North Little Rock-Conway, Arkansas; Louisville-Jefferson County, Kentucky-Indiana; and Raleigh, North Carolina also made the top 10, while Milwaukee-Waukesha-West Allis, Wisconsin was the only Northern market to make an appearance.

“In these markets, the price-to-income and price-to-rent ratios are in line with historical levels and the flipping- and fraud-risk indicators are low,” CoreLogic reported. “Although in some of the metro areas home prices have appreciated about 40 percent since January 2012, e.g. Boston and Cambridge, rents have had sizeable increases too, indicating that price and rent growth are backed up by fundamentals such as disposable income.”

Get today’s mortgage rates

Want to take advantage of these lower-risk markets before it’s too late? Then shop around and see what mortgage rates you qualify for today.

Verify your new rate (Jan 18th, 2019)