The 6 Least Healthy Housing Markets In The U.S.

While home values have rebounded and many markets have gotten much stronger in the past few years, these metropolitan areas are lagging behind.

Aug 9, 2014 at 1:30PM

While the housing markets throughout most of the United States have improved dramatically since the financial crisis, there are some areas that are severely lagging. There are some places where foreclosures are still flooding the market with homes, lots of homeowners are underwater or delinquent on their mortgages, and where home values are still falling.

Real estate website Zillow rates the "health" of housing markets on a scale of zero to 10. The rating takes into account several sets of data, including home value increases or decreases and the average number of days homes remain on the market. It also includes statistics about the financial health of homeowners, such as the percentage of homeowners with negative equity and the mortgage delinquency rate. 

Out of the 100 largest metropolitan areas in the U.S., these six areas all score lower than 0.5 out of 10 in terms of market health, and for a variety of different reasons.

6. Baltimore, Maryland (0.49/10)
Baltimore has one of the least healthy markets in the country mainly because of the financial condition of its homeowners. Nearly 23% of Baltimore homeowners have negative equity in their homes, and about 9.5% of homeowners with a mortgage are in some stage of delinquency.

Despite this, Baltimore actually has a lower-than-average stock of bank-owned homes, and the average home sits on the market for just over three months.

Baltimore Pd

5. Albuquerque, New Mexico (0.47/10)
One of the reasons Albuquerque is unhealthy is because its home values are declining at a time when most of the country's markets have been rapidly rising in value.

Over the past year, the average Albuquerque home has lost nearly 3% of its value, while the U.S. average home value has climbed by more than 6%.

Albuquerque Ron Reiring

Ron Reiring

4. Kansas City, Missouri (0.43/10)
Like Albuquerque, Kansas City is also a declining market, with the average home value dropping 3.6% in the past year. Additionally, more than 20% of homeowners are underwater on their mortgages, and the market is flooded with foreclosed homes, which make up more than 22% of the available homes.

However, even though a lot of homeowners are underwater, Kansas City's residents have been pretty financially responsible. Less than 4% of homeowners are delinquent on their mortgage, the lowest on this list.

Kansas City Pixabay Pd

3. New Haven, Connecticut (0.41/10)
The worst statistic from New Haven is the time it takes to sell a house. The average home sits on the market for 131 days, which is by far the longest on this list.

The area's homeowners are also in pretty bad financial shape, with a very high 10.2% delinquency rate and a negative equity rate of 23.3%.

New Haven Wiki Versageek

wikipedia/ Versageek

2. St. Louis, Missouri (0.39/10)
Homes are selling fairly quickly in St. Louis, with the average home on the market for just 92 days.

However, that's about the only positive data in this market. Home prices have declined over the past year, there is a relatively high inventory of foreclosures on the market, and 23% of homeowners have negative equity.

St Louis Flickr Bev Sykes

flickr/ Bev Sykes

1. Chicago, Illinois (0.30/10)
Despite a year-over-year value gain of more than 8%, Chicago is the least healthy market among the 100 largest U.S. metropolitan areas.

Chicago has an enormous supply of foreclosed homes on the market (34.4%), and its homeowners are in poor overall financial health. The negative equity rate of more than 28% is by far the highest on this list, and the 8.4% mortgage delinquency rate is well above the national average.

Chicago Flickr Mindfrieze

flickr/ Mindfrieze

These markets all have some themes in common. Basically, there are still a bunch of foreclosures that need to work their way through the system, and the negative equity and delinquency rates indicate there are probably more to come.

Until home values rise sufficiently in these areas to reduce the amount of underwater homeowners, these will remain unhealthy housing markets.

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