A report on county-level housing markets vulnerable to declines due to home affordability, underwater mortgages, and other measures shows that California, New Jersey, and Illinois once again have the highest concentrations of the most-at-risk markets.
The Special Housing Risk Report released earlier this week by ATTOM, a curator of real estate data, indicated that in the first quarter of 2024, the less vulnerable markets were spread mostly throughout the South and Midwest.
The Q1 patterns—derived from 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.
At the other end of the risk spectrum, 22 of the 50 markets considered least likely to decline were in Virginia, Wisconsin, and Tennessee.
“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 at risk based on several factors: percentage of homes facing possible foreclosure; portion with mortgage balances exceeding estimated property values; percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes; and local unemployment rates.
Using these factors, 590 county-level housing markets were analyzed in the U.S. to determine the 50 counties most vulnerable to housing market troubles. Essex, Passaic, Sussex, and Union counties in North Jersey were included on this list.
For example, major costs of homeownership—property tax, mortgage, and insurance—average 62.1% of local wages in Passaic County compared to a national figure of 32.3%.
In terms of foreclosures rates among New Jersey counties: Cumberland County (1 in 488), Warren County (1 in 517), and Sussex County (1 in 567) were identified as having particularly high rates compared to a national rate exceeding 1 in 1,478 homes.
