Market challenges—including the recently rising mortgage rates, continued rise of home prices and general lack of inventory—have put many markets across the country at a serious risk of downturn, according to a new report from ATTOM.
ATTOM’s Special Housing Impact Report for Q2 2023 found that New Jersey and Illinois have the highest concentrations of the most-at-risk markets in the country, with the biggest clusters in the New York City, Chicago and Philadelphia areas. On the other hand, the South, along with other parts of the Northeast, are generally less exposed to market woes.
- The 50 most at-risk counties included two in New York City (Kings and Richmond counties), six in the New Jersey (Bergen, Essex, Ocean, Passaic, Sussex and Union counties, all NYC suburbs) and six in the Chicago metro area (Cook, De Kalb, Kane, Kendall, and Will counties, plus Porter County in Indiana). The three in the Philadelphia metro area that were among the top 50 in the second quarter were Philadelphia County as well as Gloucester and Camden Counties in New Jersey.
- California had six counties among the top 50: Butte County, Humboldt County and Solano County in the northern part of the state; Madera County and San Joaquin County in central California, and Riverside County in the southern part of the state.
- Another six were scattered around states along the southeast coast of the U.S., with three others in Indiana (Delaware, Elkhart and La Porte).
- 18 of the 51 counties considered least vulnerable to housing-market problems were in the South, while 17 were in the Northeast. Just 11 were in the Midwest, with five in the West. (A total of 51 counties made the list of least at-risk because of a tie in the rankings.)
- Virginia had six of the 51 counties, including five in the Washington D.C. metro area (Alexandria, Arlington, Fairfax, Loudoun and Prince William), while Massachusetts had five, including three in the Boston area (Middlesex, Norfolk and Suffolk).
- Four were in Tennessee, including three in the Nashville metro (Davidson, Rutherford and Williamson).
- Montana also had four—Flathead, Gallatin, Missoula and Yellowstone—as did New Hampshire—Hillsborough, Merrimack, Rockingham and Strafford.
- The one measure, among the four analyzed, that varied little between the most- and least-at-risk counties was home affordability.
- Major ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes consumed more than one-third of average local wages in 33 of the 50 most vulnerable counties.
- The highest percentages in those markets were in Kings County, New York (104.4%); Riverside County, California (69.2%); Richmond County, New York (60.9%); Bergen County, New Jersey (59%) and Passaic County, New Jersey (58.8%).
- Nationwide, major expenses on typical homes sold required 33.4% of average local wages—almost exactly one-third.
- Those expenses required at least a third of the average local wage in 35 of the 51 counties that were least vulnerable.
- The largest percentages among that group were in Gallatin County, Montana (70.6%); Barnstable County, Massachusetts (69%); Flathead County, Montana (66.6%); Missoula County, Montana (63.4%) and Washington County, Rhode Island (62.1%).
“We continue to see pockets of the U.S. housing market where the foundation is a bit shakier—or more solid—than others, based on important quarterly metrics,” said Rob Barber, CEO at ATTOM. “As with earlier reports, it doesn’t mean any one area or cluster of areas is about to crash. The overall market and the economy remain way too strong for imminent warnings to be sounded. But there are weak spots that are still popping up as areas to watch, especially if the market turns back downward.”
For the full report, including additional data on underwater mortgages within the researched counties, click here.