2016’s Cities Where People Are Most Overleveraged on Their Homes

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In this report, WalletHub’s analysts determined precisely which cities are home to the most overleveraged mortgage debtors by comparing the average mortgage balances against the median income and median home value in each of 2,521 cities. Scroll down for the results, expert home buying advice and a full description of our methodology. For financially inspired advice on both buying and owning a home, they asked a panel of experts including MIT Center for Real Estate’s, Bill Wheaton.

Is this a good time to buy a home?
Yes – last year was even better. Buying “at the bottom” is an opportunity that does not come along often.

What are the most common financial mistakes people make when buying a home and which are most costly in the long-term?

  • Variable rate mortgage because you think you are going to move, but you don’t.
  • Believing that prices never go down and always go up.

If someone is currently overleveraged and has trouble affording their mortgage payments what steps should they take?
Apply for HARP.

Is there any way for an individual to tell if their local housing market is overpriced?
People can tell if their local housing market is overpriced if:

  • Prices are above replacement cost (land and structure).
  • People are buying more/bigger housing than they need “Because it’s a good investment’.
  • People are buying second homes.
  • Once you adjust for general economic inflation, you find prices have never been this high.

Are there certain housing markets or circumstances where it is ok to be overleveraged in mortgage debt? If so, how much is too much?
You could be highly leveraged (e.g., 90%) if the market is very stable (e.g., Dallas) and you are planning to live there for decades – hence the amortization will actually provide you with slow steady wealth creation.

Full Report

2016’s Cities Where People Are Most Overleveraged on Their Homes