According to the Special Housing Risk Report published by ATTOM Data, which spotlights county-level housing markets around the U.S. that are more or less vulnerable to declines based on home affordability, underwater mortgages, and other metrics during the first quarter of 2024 found that areas of California, New Jersey, and Illinois had the highest concentrations of at-risk markets in the country.
Conversely, the report found that Southern and Midwestern markets are insulated from troubled markets on the coasts and in the Rust Belt.
According to ATTOM, the first-quarter patterns—based on gaps in home affordability, underwater mortgages, foreclosures, and unemployment—revealed that California, New Jersey and Illinois had 34 of the 50 counties around the U.S. considered most exposed to potential drop-offs. As with earlier periods over the past few years, those concentrations dominated the list of metropolitan areas more at risk of downturns.
ATTOM went on to say that there is hope at the other end of the risk spectrum. Twenty-two of the 50 markets considered least likely to decline fell in Virginia, Wisconsin and Tennessee. They included four each in the Washington, DC, and Richmond, VA, metro areas.
“The patterns of varying market vulnerability that we’ve been seeing over the past few years are pretty much continuing in place, with some of the same areas falling out at opposite ends of the trend line,” said Rob Barber, CEO at ATTOM. “Once again, this is not to suggest that any one market is facing imminent decline. It’s more a measure of vulnerability gaps. But with the housing market slowing down over the past year, some metro areas appear notably better positioned than others to withstand a scenario of the market topping out and heading downward.”
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 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, 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 590 counties around the United States with sufficient data to analyze in the first quarter of 2024. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks.
Top-level localized data
- The metropolitan areas around Chicago, and New York, as well as broad stretches of northern and central California, had 25 of the 50 U.S. counties considered most vulnerable in the first quarter of 2024 to housing market troubles (from among 590 counties with enough data to analyze).
- The 50 most at-risk counties included De Kalb, Kane, Kendall, McHenry and Will counties in Illinois and Lake County in Indiana, one in New York City (Kings County, which covers Brooklyn) and four in the New York City suburbs (Essex, Passaic, Sussex and Union counties, all in New Jersey).
- The 14 in California included Butte County (Chico), El Dorado County (outside Sacramento), Humboldt County (Eureka), Solano County (outside Sacramento) and Yolo County (outside Sacramento) in the northern part of the state, and Fresno County, Kern County (Bakersfield), Kings County (outside Fresno), Madera County (outside Fresno), Merced County, San Joaquin County (Stockton), Stanislas County (Modesto) and Tulare County (outside Fresno) in central California. One other, San Bernardino County, was in southern California.
Counties facing greater exposure to declines have weaker levels of affordability, underwater mortgages, foreclosures, and unemployment.
ATTOM went on to say that major homeownership costs (consisting of mortgage, taxes, and insurance) on median-priced single-family homes and condos consumed more than one-third of households local wages in 36 of the 50 counties surveyed to be most vulnerable—30% is the traditional wage mark at which a homeowner is considered to be overburdened by housing costs.
Nationwide, major expenses on typical homes sold in the first quarter required 32.3% of average local wages—almost exactly one-third.
At least 5% of residential mortgages were underwater in the first quarter of 2024 in 41 of the 50 most-at-risk counties. Nationwide, 6.6% of mortgages fell into that category, with homeowners owing more on their mortgages than the estimated value of their properties.
More than one of every 1,000 residential properties faced a foreclosure action in the first quarter of 2024 in 44 of the 50 most vulnerable counties. Nationwide, one in 1,478 homes were in that position.
Further, the March 2024 unemployment rate was at least 5% in 30 of the 50 most at-risk counties, while the nationwide figure stood at 3.8%.
Click here to see the report in its entirety.
