In Q2 of 2024, ATTOM produced a Special Housing Risk Report that highlights county-level housing markets across the country that are more or less susceptible to falls based on home affordability, underwater mortgages, and other metrics. According to the analysis, the most at-risk markets in the nation are—once again—concentrated in California, New Jersey, and Illinois, with some of the largest clusters located in inland California as well as the New York City and Chicago regions. Markets that were less susceptible were still mostly found in the Midwest and the South.
Based on differences in home affordability, underwater mortgages, foreclosures, and unemployment, the second-quarter patterns showed that over half of the counties in the U.S. thought to be most vulnerable to possible drop-offs were in California, New Jersey, and Illinois. These concentrations topped the list of regions more vulnerable to downturns, just as they have in previous times over the previous few years.
That list of county-level housing markets included seven in the New York City region, five in the Chicago metropolitan area, and twelve in parts of California, largely in the state’s interior distant from the Pacific coast. The remainder were dispersed mostly throughout the Midwest and Northeast, as well as the South. Conversely, over 50% of the markets deemed least likely to fall occurred in Virginia, Tennessee, and Wisconsin. There were six in the Washington, DC, region and three in each in the metro areas of Richmond, VA, and Nashville, TN.
“The housing market boom continues to gain momentum, thanks to another Springtime boost. However, some markets show signs of potential instability, which suggests a mixed level of risk, particularly in certain regions that repeatedly show signs of concern,” said Rob Barber, CEO of ATTOM. “While these observations don’t indicate immediate red flags or warning signs of an impending downturn, they do highlight areas of relative risk. With the housing market still facing challenges, it’s crucial to closely monitor regions where key indicators suggest a higher likelihood of issues.”
Based on the share of homes facing potential foreclosure, the share of mortgage balances exceeding estimated property values, the percentage of average local wages needed to cover major home ownership expenses on median-priced single-family homes, and the local unemployment rate, counties were deemed to be mostly at risk. These findings came from an examination of the most current ATTOM-prepared information on home equity, affordability, and foreclosure.
The federal government provided the unemployment rates. In Q2 of 2024, rankings were determined by combining those four criteria across 589 U.S. counties that had enough data available for analysis. Each category’s counties were ordered from lowest to highest, and the final result was determined by combining the four positions. Important risk disparities persisted in several U.S. regions in the second quarter of 2024, despite the fact that important housing market indicators have improved or worsened this year. These metrics included affordability, equity, and home prices.
At-Risk Counties Have Higher Unemployment, Underwater Mortgages, Foreclosures, & Affordability
In Q2 of 2024, some 24 out of the 51 U.S. counties were deemed most vulnerable to housing market issues. These counties included large portions of California and the urban centers around New York, and Chicago. The counties were among 589 in the country having sufficient data for analysis.
The most at-risk counties included three in New York City (Kings County, which covers Brooklyn, Richmond County, which covers Staten Island, and Bronx County) and four in the New York City suburbs (Essex, Passaic, Sussex and Union counties, all in New Jersey). It also included Cook, Kendall, McHenry and Will counties in Illinois and Lake County in Indiana.
In 33 of the 51 counties judged most vulnerable to market drop-offs in Q2 of 2024, major homeownership costs (mortgage payments, property taxes, and insurance) on median-priced single-family homes were assessed seriously unaffordable. This indicates that those costs accounted for at least 43% of the typical local pay. Major costs for average residences sold in the country during the second quarter came to 35.1% of average local wages.
The highest percentages in the most at-risk markets were in:
- Kings County (Brooklyn), NY (111.8% of average local wages needed for major ownership costs)
- Riverside County, CA (74.4%)
- Washington County (St. George), UT (70.4%)
- Richmond County (Stated Island), NY (66.8%)
- Passaic County, NY (outside New York City) (65.3%)
In 34 of the 51 most at-risk counties, at least 5% of residential mortgages were underwater in the second quarter of 2024. Homeowners who owed more on their mortgages than the estimated value of their residences made up 5.1% of all mortgages in the country. Of the 51 counties that were considered to be most at-risk, Tangipahoa Parish, LA (east of Baton Rouge) had the highest percentage of underwater residents (26.1%); followed by Peoria County, IL (16.3%); Lake County (Gary), IN (13.2%); Orleans Parish (New Orleans, LA), (13.1%); and Montgomery County (Dayton), OH (11.9%).
Overall, in 39 of the 51 most vulnerable counties, more than one out of every 1,000 residential homes faced a foreclosure action in the second quarter of 2024. One in 1,575 houses across the country was in that situation. Additionally, in contrast to 33 of the most at-risk counties, some 18 of the 51 counties deemed least vulnerable to market issues in the second quarter of 2024 had major ownership costs on median-priced single-family houses that were substantially unaffordable.
To read the full report, including more data and methodology, click here.
