The home price slowdown is being foreshadowed by rising mortgage rates, a deeper discount during an economic downturn especially in geographic markets most effected by the economy, and the exposure of shadow inventory where delinquent mortgages were held back from Foreclosure during the pandemic.
Housing affordability for local buyers affects Foreclosures and that begins to define the markets most ripe for investment. For this analysis, housing affordability was expressed as the price-to-income ratio using the median home sales price in fourth quarter 2021 from ATTOM Data Solutions and the most recent median family income estimates from the Census Bureau. Looking at the largest metropolitan areas those with the biggest increase in price to income rations (between Q4 2019 and Q4 2021) vs. the nationwide increase of 37% were:
- Sarasota Florida (up 51%)
- Phoenix Arizona (up 51%)
- Cape Coral-Fort Meyers Floria (up 49%)
- Lakeland-Winter Haven Florida (up 49%)
- Austin Texas (up 46%)
- Tampa Florida (up 43%)
- Tucson Arizona (up 42%)
- Raleigh, North Carolina (up 42%)
- Charlotte, North Carolina (up 42%)
- Nashville Tennessee (up 41%)
Finally, to plug in shadow inventory, among larger markets, those with the highest percentage of potential distressed property shadow inventory were:
- Tucson, Arizona
- New York City (8.2%)
- Phoenix, Arizona (6.3%)
- Riverside-San Bernadino, California (5.9%)
- Memphis Tennessee (5%)
Looking across the United States the potential distressed property shadow inventory represents 2.6% of all existing homes sales in 2021. According to a recently released Auction.com 2022 Buyer Insights report: 55% of buyers describe their market as “overvalued with a correction possible”. Data from various sources predicts that Foreclosure volume will increase in 2022 off a record low in 2021.
Below is an interactive chart showing the statistics by geographic region:
