These Are the Most Vulnerable Housing Markets

A new report from ATTOM highlights U.S. counties most exposed to risk during a downturn in the residential market, as well as those least likely to suffer. Many in the former category are already experiencing those effects as housing costs swallow up more than a third of average local wages.

“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,” ATTOM noted.

By these measures, 25 of the 50 counties considered at highest risk in 4Q 2023 were located in the Chicago metro (five), New York City (one), New Jersey suburbs adjoining New York City (five), and a stretch of inland California (14). Two counties in the Philadelphia metro and two near St. Louis, MO, were also in the top 50.

“Counties more vulnerable to declines have less-affordable homes as well as higher levels of underwater mortgages, foreclosures and unemployment,” the report noted.

In 43 of the most vulnerable counties ownership costs gobbled up more than a third of average local wages, while just 31 of the least vulnerable counties were so exposed. In some counties, the share was much higher. In Kings County, NY (Brooklyn) homeownership costs were more than double average wages (114%). In Riverside County, CA costs were 74.2% of average wages, in El Dorado County, CA 73.7%, in Contra Costa County, CA 67.2% and in Passaic County, NY 67.1%.

At least five percent of residential mortgages were underwater in 4Q 2023 in 36 of the 50 highest-risk counties.

More than one of every 1,000 properties faced foreclosure in as many counties – compared to the national foreclosure rate of one in 1,503 homes. Some of the highest foreclosure rates were in three New Jersey counties: Cumberland, Sussex, and Camden, along with Madison County, IL and Madera County, CA.

In 39 of the 50 weakest counties, the unemployment rate was at least 4%, compared to 3.7% nationally.

“Fault lines running through the foundation of the U.S. housing market continue to appear in different parts of the country, with some areas remaining more or less vulnerable than others,” said ATTOM’s CEO Rob Barber.

While counties in the Chicago and New York metro areas and parts of California had some of the highest rates of market risk, counties in the South and Midwest fared somewhat better. The Midwest claimed 25 of the 50 least vulnerable counties, with 14 in the South and nine in the Northeast and only two in the West.

Nine of the counties with the lowest risk were in Wisconsin and five in the Kansas City area. While home payments still consumed more than one-third of average wages in 31 of these 50 counties – in some cases substantially more – fewer than five percent of residential mortgages were underwater in 4Q 2023 in 39 counties, no county had more than one in 1,000 homes at risk of foreclosure, and the unemployment rate was less than 3% in most cases.

“This is not a warning sign for homeowners to run out and sell, or rush to buy, in any specific market. The housing market remains strong throughout most of the country despite some recent small downturns,” Barber commented.

Multifamily Spring:

Multifamily Spring is coming to New York City this April 18. This year’s program will bring together the industry’s most influential and knowledgeable real estate executives from the multifamily sector for 5 hours of face-to-face networking and over 5.5 hours of can’t miss sessions. Learn more or register here.