The metropolitan areas around Chicago, Illinois, New York City, New York, and inland California were among the most vulnerable to housing market troubles in the first quarter of 2024, according to a study by ATTOM.
The company, which curates land, property, and real estate data, released a Special Housing Risk Report on Thursday analyzing which counties in the U.S. were more exposed to market downturn between January and March based on home affordability, underwater mortgages—where people owe more on their home loan than the estimated value of their home—and other measures.
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They found that California, Illinois, and New Jersey were the states with the highest concentrations of most-at-risk markets, while less vulnerable markets were focused in counties in the South and the Midwest. A housing market downturn—which is not the same as a crash—usually occurs when demand starts dropping and prices consequently plummet, with owners seeing the value of their homes slide down.
The three states together had a total of 34 of the 50 counties around the U.S. which are considered the most vulnerable to such a downturn. Six were in and around Chicago, five in New York City, and 14 in northern and central California, mostly away from the coast. The remaining 16 counties were scattered across the country.
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"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, in a written statement shared with Newsweek.
"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," he added.
ATTOM analyzed a total of 590 counties across the U.S. The 50 most vulnerable counties included De Kalb, Kane, Kendall, McHenry and Will counties in Illinois; Lake County in Indiana; Kings County in New York City; Essex, Passaic, Sussex and Union counties in New Jersey; and Butte, El Dorado, Humboldt, Solano, Yolo, Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislas, Tulare and San Bernardino counties in California.
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These counties were found to have a dangerous combination of high percentages of homes facing possible foreclosure, high ratio of mortgage balances exceeding estimated property values, and relatively insufficient average local wages or higher unemployment rates.
In 36 of the 50 counties considered most vulnerable to a market downturn, residents used more than one-third of average local wages for homeownership costs, including mortgage payments, property taxes, and insurance, in the first quarter of the year. At the national level, major expenses on typical homes sold in Q1 of 2024 required 32.3 percent of average local wages.
The counties where residents spent the highest share of the average local wages in major homeownership costs were Kings County, New York (Brooklyn), at 109.5 percent; El Dorado County, California (outside Sacramento), at 64 percent; San Joaquin County, California (Stockton), at 58.4 percent; and San Bernardino County, California, at 57.3 percent.
The counties with the highest rates of underwater mortgages among the 50 most at-risk ones were Webb County (Laredo), Texas, at 31.5 percent; Tangipahoa Parish, Louisiana (east of Baton Rouge), at 21.2 percent; Livingston Parish, Louisiana, at 20.6 percent; Peoria County, Illinois, at 19.8 percent; and Hardin County, Kentucky (outside Louisville), at 15.9 percent.
The highest foreclosure-case rates were in Osceola County (Kissimmee), Florida (one in 480 residential properties facing possible foreclosure); Cumberland County (Vineland), New Jersey, (one in 488); Warren County, New Jersey (outside Allentown, PA) (one in 517); Sussex County, New Jersey (outside New York City) (one in 555); and Lake County, Indiana (outside Chicago, Illinois) (one in 567).
The least vulnerable counties were concentrated in Virginia, Wisconsin, and Tennessee.
Uncommon Knowledge
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