Property data curator ATTOM released a Special Housing Risk Report spotlighting county-level housing markets around the United States that were more or less vulnerable to declines, based on home affordability, underwater mortgages and other measures in the fourth quarter.
The report showed that California, New Jersey and Illinois continued to have the highest concentrations of the most-at-risk markets in the country, with some of the biggest clusters in the New York City and Chicago areas, along with inland California. Less-vulnerable markets were spread mainly throughout the South and Midwest.
The fourth-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 34 of the 50 counties considered most vulnerable to potential drop-offs. As with earlier periods over the past few years, those concentrations dwarfed other parts of the country, with the latest coming at a time of significant market uncertainty connected to increasingly unaffordable homeownership costs and relatively high home-mortgage interest rates.
The 50 counties on the most-exposed list included six in and around New York City, five in the Chicago metropolitan area and 14 in areas of California away from the Pacific coast. The rest were scattered around other parts of the country.
At the other end of the risk spectrum, the Midwest and South again had the most markets considered least likely to decline, including nine in Wisconsin and five in Kansas.
“Fault lines running through the foundation of the U.S. housing market continue to appear in different parts of the country, with some areas remaining more or less vulnerable than others,” Rob Barber, CEO at ATTOM, said in a release. “As always, this is not a warning sign for homeowners to run out and sell, or rush to buy, in any specific market. The housing market remains strong throughout most of the country despite some recent small downturns. Rather, this report again spotlights areas that appear more or less exposed to a market fall, should that start to happen, based on key measures.”
Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for major homeownership expenses on median-priced single-family homes and local unemployment rates. The conclusions were drawn from an analysis of the most recent home affordability, home equity and foreclosure reports prepared by ATTOM. Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 580 counties around the United States with sufficient data to analyze. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks.
Ongoing risk disparities throughout the country persisted in the fourth quarter as key market measures tracked downward and homeownership remained a financial stretch across much of the nation.
The national median home price was flat during the summer of last year and dropped 3 percent in the fall after a springtime surge stalled out. Declining prices in late 2023 slightly deflated homeowner equity and raised underwater mortgage rates. But even as values dipped a bit, home affordability continued to consume at least a third of average local wages in most of the U.S., putting the nation’s 12-year housing market boom at risk, ATTOM said.