These 3 countries are at risk of a collapse in real estate prices

Real estate prices in the U.S. may be high, but the party could be over sooner than you think.

A new report shows that more than 50 counties across the country are at risk of a housing market collapse.

It's a dream come true for first-time buyers hoping to score a bargain, but a nightmare for current homeowners delighting in astronomical property prices.

According to a study by real estate data company Attom, prices in counties in states such as California, New Jersey and Illinois are most affected by a rapid decline.

What are the causes? The usual suspects: rising foreclosures, negative credit mortgages and rising unemployment.

“The real estate market boom continues to gain momentum. However, some markets are showing signs of potential instability,” said Attom CEO Rob Barber.

Attom analyzed data from 600 U.S. counties and identified important hotspots such as the metropolitan areas of New York City and Chicago, as well as large parts of California.

Of the 51 most at-risk counties, 24 were in those regions, including Brooklyn, Staten Island and the Bronx in New York — and four nearby New Jersey counties such as Essex and Union. Midwestern counties such as Cook in Illinois and Lake in Indiana also landed on the danger list, along with a dozen counties scattered across California, from Butte in the north to Riverside in the south.

Meanwhile, pandemic-hit housing hotspots in the Sun Belt, such as Fort Worth and Tampa, are already feeling the effects: As more properties come onto the market, real estate prices are falling.

Austin, Texas, and Cape Coral, Florida, have seen the biggest declines, while real estate prices in the Lakeland and Crestview regions of Florida are also declining.

In Florida, the condo market is in full-blown crisis. Owners looking to offload their properties are slashing prices — sometimes by nearly 40% — to avoid being stuck with high repair bills. These skyrocketing costs come after the state legislature forced condo owners to address long-neglected maintenance issues following the 2021 collapse of the Champlain Towers in Surfside, which killed 98 people.

Some owners are seeing their asking prices shrink by nearly half a million dollars, in what some brokers say is the worst real estate disaster in decades.

This provides some relief for buyers in these weaker markets, but they should not rest too much on their laurels.

The average down payment is now a whopping $67,500, and in some U.S. cities it is even higher, exceeding the $400,000 mark.

“As the housing market continues to face challenges, it is critical to closely monitor regions where key indicators suggest a higher likelihood of problems,” warned Barber.

Down payments have also risen sharply in percentage terms: In June, the typical buyer had to pay 18.6 percent of the purchase price, compared to 15 percent in the previous year.

Increased mortgage rates are forcing buyers to pay more money up front to mitigate the financial hit. The real estate market may be booming right now, but storm clouds are gathering on the horizon.