Metro Denver in top half of vulnerable housing markets, study finds

Metro Denver in top half of vulnerable housing markets, study finds

The Denver metro area’s housing market is among the most vulnerable in an economic downturn, but it doesn’t rank among the most bubbly markets in the country, according to a analysis by Seattle-based brokerage firm Redfin.

With interest rates rising, home sales falling, and house price increases peaking, Redfin looked at a variety of metrics to assign a “risk” score to major U.S. metropolitan areas.

“Recession fears are mounting, primarily because the Fed has signaled it will continue to raise interest rates to keep inflation under control and calm consumer demand. Rising interest rates have led to a spike in mortgage rates, which have already cooled the housing market,” said Sheharyar Bokhari, senior economist at Redfin, in a statement accompanying the study.

If the country enters a recession, assuming it hasn’t already, a property market crash like the one seen during the Great Recession is unlikely, Bokhari predicted. But that doesn’t mean that some areas won’t be hit harder than others or that house prices won’t start to fall.

“First, what goes up must come down. Home prices have soared at an unsustainable pace in many pandemic homebuying hotspots. Additionally, places where people tend to have high debt relative to their income and home equity are vulnerable because their residents are more likely to foreclose or sell at a loss,” he said. declared.

Among the risk factors Redfin examined were the average ratio of real estate mortgages to home values; the share of home sales that were returned; how quickly a given housing market cooled in the first half of this year; how much migration, in or out, an area sees; market share of second home sales and annual house price increases.

With a risk score of 84, Riverside, California has the highest risk of a housing downturn among the 98 metropolitan areas examined. It was followed by Boise, Idaho, and Cape Coral and North Port in Florida. Las Vegas, known for its boom and bust cycles, was also up there with a score of 74.

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