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The 10 US cities most vulnerable to a housing downturn when the next recession happens

The 10 US cities most vulnerable to a housing downturn when the next recession happens

San Francisco Metro Area

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In some areas, a recession can negatively impact the housing market.

  • An analysis by Redfin found the 10 housing markets that are at the greatest risk of a downturn in the next recession.
  • The study measured each metro area on seven variables.
  • The four main, highest-weighted variables include: the ratio of median home sale prices to median household income, the ratio of the average home loan to the average home value, year-to-year home price volatility, and the number of flipped homes that have been sold twice within 12 months.
  • Visit Business Insider's homepage for more stories.

In the midst of the United States' ongoing trade war with China, talks of a looming recession have been floating around the media.

When it comes to real estate, there are several key factors that help forecast which housing markets will be the most vulnerable when the next recession hits - whether it happens now or ten years from now.

A recent analysis by Redfin looked at major metro areas across the US and found the 10 that are most likely to be at risk of a housing downturn in the next recession.

"Recessions don't always necessarily lead to big swings in home prices, but they do in certain areas. That's why it's important to look at how much the housing market is at risk opposed to the overall economy," Redfin's chief economist Daryl Fairweather explained to Business Insider.

Read more: The 25 best places to live in America

The study measured each metro area on four main variables: the ratio of median home sale prices to the median household income, the ratio of the average home loan to the average home value, year-to-year home price volatility, and the number of flipped homes (homes that have been sold twice at different prices within 12 months). These four variables each held the same weight and were the most weighted factors in the study.

"The reason why those [four] are the most important [variables] is because they are the ones that impact housing the most," Fairweather told Business Insider.

There were three other, less weighted, variables measured in the study: the diversity of local employment, the share of the local economy that is dependent on exports, and the share of local households headed by someone 65 or older. The weight of each variable remained consistent throughout the study. You can read more on the methodology and the weight of each variable here.

Keep reading to see the 10 metro areas that are most at risk, ranked in order of increasing vulnerability to a real estate dip.

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