The 3 Riskiest States for Buying a House

Since the depths of the financial crisis, housing prices across the U.S. have been on an incredible rebound. But three states stand far above the rest when it comes to the risk that those prices may once again come tumbling down.

The fall and rise
As shown below, housing prices in the U.S. saw a meteoric rise and fall in the last decade. But after the calendar turned from 2011 to 2012, the average home price -- as measured by the Case-Shiller index -- has continued to rise:


Source: S&P Dow Jones Indices.

After the 30% dip in housing prices, many individuals remain weary and on guard about the prospect of the prices of their houses once again plummeting.

The riskiest states
Every three months, Arch Mortgage Insurance releases its Housing and Mortgage Market Review. It examines the odds that housing prices in specific states and cities will fall within two years, known as the Arch MI Risk Index.

It gauges things like unemployment, housing affordability, average income, and other economic data to try to gauge which cities and states present the biggest risk of housing prices falling.

There are different levels of risk. Yuma, Arizona was the riskiest city, with a score of 65 -- meaning there is a 65% chances prices will be lower in two years' time -- whereas Iowa City was one of five cities with a score of just 1.

The odds home prices will fall across the U.S. stood at just 15%, an improvement of 4 percentage points relative to last year.

And while the three states shown in the slideshow below have also seen improvement over where they stood a year ago, currently they all have twice the risk of downside versus the nation as a whole. In fact, one state has more than half of the top 25 riskiest cities in the country.

Check out the slideshow below to see what states -- and cities within those states -- have the biggest risk of seeing their home prices fall over the next two years.

Homeowners: Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

 

The 3 Riskiest States to Buy a House from The Motley Fool


Read/Post Comments (0) | Recommend This Article (60)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3037170, ~/Articles/ArticleHandler.aspx, 11/26/2014 6:18:38 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement