Property data curator ATTOM released a Special Housing Impact Report spotlighting county-level housing markets around the United States that are vulnerable to declines, based on home affordability, foreclosures and other measures in the second quarter of 2023.
The report shows that New Jersey and Illinois have the highest concentrations of the most-at-risk markets in the country, with the biggest clusters in the New York City, Chicago and Philadelphia areas. The South, along with other parts of the Northeast, are generally less exposed to market woes.
Second-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment - revealed that New Jersey and Illinois had 23 of the 50 counties most vulnerable to potential drop-offs.
Those concentrations dwarfed other parts of the country amid a time of significant uncertainty when the U.S. housing market was rebounding from a period of flat or falling values, ATTOM stated.
The 50 counties at the top of the most vulnerable list included eight in and around New York City, six in the Chicago metropolitan area and three in or near Philadelphia. Another six were scattered through northern, central and southern California. Most of the remainder were in Indiana and along the East Coast.
At the other end of the risk spectrum, the South and two New England states had the highest concentration of markets considered least likely to decline.
“We continue to see pockets of the U.S. housing market where the foundation is a bit shakier – or more solid - than others, based on important quarterly metrics,” Rob Barber, CEO at ATTOM, said in a release. “As with earlier reports, it doesn’t mean any one area or cluster of areas is about to crash. The overall market and the economy remain way too strong for imminent warnings to be sounded. But there are weak spots that are still popping up as areas to watch, especially if the market turns back downward.”
Counties were considered 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 home ownership 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 574 counties around the United States with sufficient data to analyze in the second quarter of 2023.