New Jersey, Illinois and inland California continued to have the highest concentrations of the most-at-risk housing markets in the second quarter, according to ATTOM’s special housing risk report. The biggest clusters were near New York City and Chicago.
The second-quarter patterns, based on gaps in home affordability, underwater mortgages, foreclosures and unemployment, revealed that New Jersey, Illinois and California had 33 of the 50 counties most vulnerable to potential declines, according to the report. The 50 most at-risk included nine in and around New York City, six in the Chicago metro area and 13 spread through northern, central and southern California. The rest were scattered across the U.S., including three in the Philadelphia metro area.
At the other end of the risk spectrum, the South and Midwest had the highest concentration of markets considered least vulnerable to falling housing markets.
“The Federal Reserve has promised to be as aggressive as it needs to be in order to get inflation under control, even if its actions lead to a recession,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens.”
Thirty-one of the 50 counties considered most vulnerable in the second quarter to housing-market troubles were in the metro areas around Chicago, New York and Philadelphia, as well as in California.
The top 50 counties included two in New York City (Kings and Richmond counties, which cover Brooklyn and Staten Island), seven in the New York City suburbs (Bergen, Essex, Ocean, Passaic, Sussex and Union counties in New Jersey and Rockland County in New York) and six in the Chicago metro area (Cook, Kane, Kendall, McHenry and Will counties in Illinois and Lake County, Ind.). The three in the Philadelphia metro area were Philadelphia County, along with Camden and Gloucester counties in New Jersey.
California had 13 counties in the top 50 list: Butte County (Chico), Humboldt County (Eureka), Shasta County (Redding) and Solano County (outside Sacramento) in the northern part of the state; Fresno County, Kings County (outside Fresno), Madera County (outside Fresno), Merced County (outside Modesto), San Joaquin County (Stockton) and Tulare County (outside Fresno) in central California, and Kern County (Bakersfield), Riverside County and San Bernardino County in the southern part of the state.
Counties most at-risk continue to have higher levels of unaffordable housing, underwater mortgages, foreclosures and unemployment.
At least 7 percent of residential mortgages were underwater in the second quarter in 23 of the 50 most at-risk counties. Nationwide, 5.9 percent of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Rockland County, N.Y. (outside New York City) (19.2 percent of mortgages were underwater); Lake County, Ind. (outside Chicago) (18.9 percent); Peoria County, Ill. (17.6 percent); Philadelphia County, Pa. (16.1 percent) and Saint Clair County, Ill. (outside St. Louis) (16.1 percent).
More than one in 1,000 residential properties faced a foreclosure action in the second quarter of 2022 in 40 of the 50 most at-risk counties. Nationwide, one in 1,559 homes were in that position. The highest rates in the top 50 counties were in Cuyahoga County (Cleveland) (one in 365 residential properties facing possible foreclosure); Cumberland County, N.J. (outside Philadelphia) (one in 373); Warren County, N.J. (outside Allentown, Pa.) (one in 455); Camden County, N.J. (outside Philadelphia) (one in 462) and Saint Clair County, Ill/ (outside St. Louis) (one in 470).
Half (25) of the 50 counties least vulnerable to housing-market problems from among the 575 included in the report were in the South, 14 were in the Midwest, five were in the West and six in the Northeast.
Tennessee had six of the 50 least at-risk counties, including three in the Nashville metro area (Davidson, Rutherford and Williamson counties), while Wisconsin had five - Brown County (Green Bay), Dane County (Madison), Eau Claire County, La Crosse County and Winnebago County (Oshkosh). Another four were in Arkansas: Benton County (Rogers), Craighead County (Jonesboro), Sebastian County (Fort Smith) and Washington County (Fayetteville).
Counties with a population of at least 500,000 that were among the 50 least at-risk included King County (Seattle, Travis County (Austin), Texas, Salt Lake County (Salt Lake City, Wake County (Raleigh), N.C., and Cobb County (Marietta), Ga.
Least-vulnerable counties have more-affordable homes along with lower levels of underwater mortgages, foreclosure activity and unemployment.
Less than 5 percent of residential mortgages were underwater in the second quarter in 30 of the 50 least-at-risk counties. Those with the lowest rates among those counties were Chittenden County (Burlington), Vt. (1.3 percent of mortgages were underwater), Williamson County, Texas (outside Austin) (1.4 percent), Williamson County, Tenn. (outside Nashville) (1.5 percent); Travis County (Austin), Texas (1.8 percent) and Wake County (Raleigh), N.C. (1.9 percent).