California, Illinois And East Coast Top The List Of Most Vulnerable Housing Markets

The U.S. housing market had one of its worst second-half performances in more than a decade, leaving some areas of the country more vulnerable to declines, according to real estate data curator ATTOM’s Special Housing Risk Report.

Inland California, Illinois, New Jersey and Delaware have the highest concentrations of the most-at-risk markets in the country, with the biggest clusters in the New York City and Chicago metropolitan areas, according to the report. Southern and Midwestern states are less exposed.

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 condos and local unemployment rates.

“With the U.S. housing market cooling off considerably since the middle of last year, some areas of the country continue to show signs of being more at risk of a larger downturn than others,” ATTOM CEO Rob Barber said. “That’s based on several key factors that can either boost or damage local housing markets, including unusually high home ownership costs, foreclosures and relatively weak homeowner equity.” 

The report doesn’t identify markets headed for an imminent fall — just those that appear to be more exposed to market turbulence, Barber said.

“Heading into the peak buying season of 2023, we will keep monitoring those areas closely to see if anything changes,” he said.

Thirty of the 50 U.S. counties considered most vulnerable in the fourth quarter of 2022 were in the metropolitan areas around Chicago, New York City and Cleveland as well as in Delaware and California.

At least 7% of residential mortgages were underwater in the fourth quarter in 25 of the 50 most at-risk counties. Nationwide, one in 1,549 homes was in that position. The highest foreclosure rates were in St. Clair County, Illinois, outside of St. Louis; Cumberland County, New Jersey, outside of Philadelphia; Sussex County, New Jersey, outside of New York City; Madison County, Illinois, outside of St. Louis; and Will County, Illinois, outside of Chicago.

Seventeen of the least vulnerable counties were in the Midwest, 15 were in the South, nine were in the West and nine were in the Northeast.

Among the least vulnerable counties — those where homeownership consumed the smallest portion of average wages — were Morgan County, Alabama, outside of Huntsville; Winnebago County, Wisconsin, which includes Oshkosh; Limestone County, Alabama, outside of Huntsville; Tippecanoe County, Indiana; and Olmstead County, Minnesota.


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