Boston, Los Angeles and San Francisco are the riskiest housing markets in the country, with high probabilities of declines in housing prices over the next two years, according to a list based on the PMI Risk Index.
The list considered job growth, population, median income and affordability in identifying the 13 riskiest real estate markets. It was published in the August Kiplinger’s Personal Finance Magazine and was based on the PMI Risk Index.
Soaring prices and a new generation of inexperienced real estate investors were cited by Kiplinger’s as reasons for concerns about a possible bursting of the real estate bubble. The growing number of houses bought as investments, nearly one-fourth of purchases over the past year, was also cited.
Boston was deemed the riskiest housing market in the country. It is at risk because the area has lost 200,000 jobs since 2000 and housing prices remain high, according to the Risk Index. PMI assigned a 53 percent probability that Boston housing prices will decline over the next two years.
Speculation and explosive price increases, plus the possibility of loosened restrictions leading to a substantial amount of new supply, netted Los Angeles an estimated 40 percent risk of a property slump.
The median home price in San Francisco is the highest in the nation, beating even New York, and PMI predicted a 40 percent chance of falling property values there over the next two years.
Sacramento, Calif., was pegged with a 40 percent possibility of a price decline, with Providence, R.I., netting an estimated a 39 percent possibility. Detroit, with flat job growth, had an estimated 38 percent possible price downturn.
New York, Miami, Minneapolis-St. Paul, Ft. Lauderdale, Fla., Denver, Washington, D.C. and Tampa-St. Petersburg, Fla., were also named as among the 13 cities most at risk for price downturns.
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