A new housing impact risk report by ATTOM Data shows that 30 out of 50 counties deemed most vulnerable to market drop-offs were also considered “seriously unaffordable” just from base homeownership expenses (mortgage payments, property taxes and insurance).
According to ATTOM, this means that these core expenses consumed 43% or greater of total average local wages. This is in contrast to the national average of major household expenses, which consumed 34% of wages. This figure is also above the basic affordability threshold.
Regionally, the areas hit the hardest by affordability challenges due to homeownership costs were grouped on the coasts, with Kings County (Brooklyn), New York, leading the way, with 108% of average local wages needed to fulfill major homeownership costs. This was followed by Riverside County, California, at 70% of wages and El Dorado, California (66%), Passaic County, New Jersey (66%) and New York County (Manhattan), New York (65%).
“The recent market risk patterns changed a bit in the third quarter, with some new areas making the list of places more or less exposed to downfalls. But the big picture remained pretty much the same around the country as differences in important metrics helped produce varying pockets of vulnerability,” said ATTOM CEO Rob Barber. “As with past reports, this one is not meant to suggest any given area is about to fall or is immune from problems. Rather, it spotlights locations that look to be more or less able to withstand significant changes in market conditions. We will continue to keep a close watch on markets throughout the country to see how things track.”
Another measure of affordability according to the report was the rate of mortgages considered underwater. ATTOM’s data showed a minimum of 6% of residential mortgages were considered underwater in Q3 2024 for 23 out of 50 counties considered high risk of unaffordability. Nationally, 5.5% of mortgages were classified as underwater.
By region, out of the 50 counties that showed the most vulnerability, the highest rates of underwater mortgages were scattered across all four major U.S. regions, with the South showing the most propensity for underwater mortgages. According to ATTOM, the metro with the distinction of highest rate of underwater mortgages was St. Clair County, Illinois, with 15%. This was followed by Tangipahoa Parish, Louisiana, at 13.7%, Pinal County, Arizona, at 12.4%, Philadelphia County, Pennsylvania, at 11.9% and Marion County, Florida, at 11%.
The report detailed further that in 35 out of the 50 most vulnerable counties, more than one out of every 1,000 residential properties was faced with some type of foreclosure activity in Q3 2024, compared with one of 1,618 homes that saw similar activity nationally.
By region, these properties were grouped in the Eastern portion of the United States, in the South and Northeast. The highest foreclosure rate according to ATTOM was in Charlotte County, Florida, with one out of every 449 residential properties potentially in a foreclosure situation. This was followed by Osceola County, Florida, with one in 473, Dorchester County, South Carolina, with one in 509, Cumberland County, New Jersey, with one in 571 and Warren County, New Jersey, with one in 574.
Lastly, ATTOM factored in the unemployment rate for vulnerable metros. According to ATTOM, August 2024’s unemployment rate reached a minimum of 5% in 34 of the 50 most vulnerable counties, while the national figure is 4.2%.
By region, the highest rates of unemployment were bracketed on the coasts, with most hailing from California. Merced County, California, led the way with a 9.1% unemployment rate. This was followed by Kern County, California, at 8.7%, Kings County, California, at 8.2%, Cumberland County, New Jersey, at 7.7% and Madera County, California, at 7.4%.
For the full report, click here.
