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Report: Chicago a Riskier Housing Market than Baltimore

By Sally Deneen

Chicagoland is a riskier housing market than Baltimore and St. Louis, according to new research by real estate marketplace Zillow.

Local homebuyers who find themselves having to sell within five years appear to stand a 17 percent chance of losing money. At least, that's the case if you judge the future by what has happened in the local housing market since 1979, according to Zillow's historical research.

But, for residents of other states, buying may be a more attractive option than looking for a new rental.

Bloomberg reports that it asked Zillow to determine the riskiest markets over the last 35 years.

"Our measure of risk: Assuming buyers held on to their homes for five years before selling, what was their chance of suffering a loss? " states Bloomberg. Zillow analyzed median home values over 117 rolling five-year periods since 1979 to come up with its list of markets that have been likeliest – and least likely – to lose money for homeowners.

The least risky cities among the 50 biggest metro areas proved to be Buffalo, N.Y, and Pittsburgh – with zero percent risk of loss in those 35 years. They're followed by metro Louisville, Ky. In the Kentucky Derby's hometown, sellers faced a 3 percent risk of loss.

"Some of the most risky areas may come as a bit of a surprise, as they aren’t known as places that were hardest-hit after the most recent housing bubble," the report stated.

The five riskiest areas over the past 35 years have been:
- Hartford, Conn., 37 percent risk of loss
- Providence, R.I., 32 percent risk
- Riverside, Calif., 31 percent
- Boston, 30 percent
- Los Angeles, 29 percent

By this broad-sweep measure, Baltimore and St. Louis do well, with a 13 percent and 14 percent risk of loss, respectively. Las Vegas came in at 21 percent.

So, that's different from looking at places with the hugest one-year drops in home values. If you look only at metro areas with the worst one-year declines in home values, then Las Vegas proves hardest hit, with a 30 percent fall in home values in the year ending September 2009. Riverside is next, with a 29 percent decline in the year ending March 2009, according to Zillow.

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