Property data curator ATTOM released a Special Housing Risk Report spotlighting county-level housing markets that are more or less vulnerable to declines in the third quarter, based on home affordability, foreclosures, underwater mortgages and other measures.
Data shows that California, 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 and Chicago areas, as well as central California. Less vulnerable markets are spread mainly throughout the South, Midwest and Northeast.
Third-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 33 of the 50 counties considered most vulnerable to potential drop-offs. Those concentrations dwarfed other parts of the country at a time of mixed market trends when home prices and homeowner equity improved but home affordability and foreclosure activity worsened.
“Some parts of the country continue to pop up on the radar as places to watch for signs of housing-market drop-offs, based on key quarterly measures,” Rob Barber, CEO at ATTOM, said in a release. “Once again, it is important to stress that getting onto the most-vulnerable list doesn’t signal an imminent crash for any local market. It just means that they have greater potential tripwires that could lead to a decline. Those remain areas to watch, especially given the overall varied trends in the market.”
The 50 counties on the most-exposed list included nine in and around New York City, seven in the Chicago metro area and five in central California. The rest were scattered around northern and southern California and widely across other parts of the country.
At the other end of the risk spectrum, the South had the most markets considered least likely to decline, followed closely by the Midwest and a group of states in New England.
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.
Conclusions were drawn from an analysis of the most recent home affordability, 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 578 counties with sufficient data to analyze in the third quarter of 2023.