New York City and Chicago Areas Remain Vulnerable to Housing Issues Despite Strong Overall Markets; South Region Faces Less Exposure While West Has More
IRVINE, Calif., Sept. 5, 2024 /PRNewswire/ — ATTOM, a leading curator of land, property, and real estate data and analytics, today released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, underwater mortgages and other measures in the second quarter of 2024. The report shows that California, New Jersey and Illinois once again had the highest concentrations of the most-at-risk markets in the country, with some of the biggest clusters in the New York City and Chicago areas, as well as inland California. Less-vulnerable markets remained spread mainly throughout the South, along with parts of the Midwest.
The second-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that nearly half of the counties around the U.S. considered most exposed to potential drop-offs were in California, New Jersey and Illinois. As with earlier periods over the past few years, those concentrations dominated the list of areas more at risk of downturns.
County-level housing markets on that list included seven in around New York City, five in the Chicago metro area and 12 in areas of California mostly away from the Pacific coast. The rest were scattered largely around the South as well as other parts of the Midwest and Northeast.
At the other end of the risk spectrum, close to half the markets considered least likely to decline fell in Virginia, Wisconsin and Tennessee. They included four in the Washington, DC, area and three each in the Richmond, VA, and Nashville, TN, metro areas.
“The housing market boom continues to gain momentum, thanks to another Springtime boost. However, some markets show signs of potential instability, which suggests a mixed level of risk, particularly in certain regions that repeatedly show signs of concern,” said Rob Barber, CEO of ATTOM. “While these observations don’t indicate immediate red flags or warning signs of an impending downturn, they do highlight areas of relative risk. With the housing market still facing challenges, it’s crucial to closely monitor regions where key indicators suggest a higher likelihood of issues.”
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 home ownership expenses on median-priced single-family homes and local unemployment rates. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 589 counties around the United States with sufficient data to analyze in the second quarter of 2024. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks. See below for the full methodology.
Significant gaps in risk continued in different parts of the U.S. during the second quarter of 2024 as key housing market metrics have gotten either better or worse this year. Those measures included home prices, equity and affordability.
Vulnerable housing markets still clustered around Chicago, New York City and inland California
The metropolitan areas around New York, NY, and Chicago, IL, as well as broad stretches of California, had 24 of the 51 U.S. counties considered most vulnerable in the second quarter of 2024 to housing market troubles. The counties were among 589 around the nation with enough data to analyze. (The report includes 51 counties at either end of the risk spectrum, instead of the usual 50 that have been included in prior reports, because of ties in rankings).
The most at-risk counties included three in New York City (Kings County, which covers Brooklyn, Richmond County, which covers Staten Island, and Bronx County) and four in the New York City suburbs (Essex, Passaic, Sussex and Union counties, all in New Jersey). It also included Cook, Kendall, McHenry and Will counties in Illinois and Lake County in Indiana.
Another 12 were in California: Butte County (Chico), Humboldt County (Eureka), Solano County (outside Sacramento) and Shasta County (Redding) in the northern part of the state, plus Kern County (Bakersfield), Kings County (outside Fresno), Madera County (outside Fresno), Merced County, San Joaquin County (Stockton) and Stanislaus County (Modesto) in central California. Two others, Riverside and San Bernardino counties, were in southern California.
At-risk counties have worse levels of affordability, underwater mortgages, foreclosures and unemployment
Major home-ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes were considered seriously unaffordable in 33 of the 51 counties deemed most vulnerable to market drop-offs in the second quarter of 2024. That means those expenses consumed at least 43 percent of average local wages. Nationwide, major expenses on typical homes sold in the second quarter required 35.1 percent of average local wages.
The highest percentages in the most at-risk markets were in Kings County (Brooklyn), NY (111.8 percent of average local wages needed for major ownership costs); Riverside County, CA (74.4 percent); Washington County (St. George), UT (70.4 percent); Richmond County (Stated Island), NY (66.8 percent) and Passaic County, NY (outside New York City) (65.3 percent).
At least 5 percent of residential mortgages were underwater in the second quarter of 2024 in 34 of the 51 most-at-risk counties. Nationwide, 5.1 percent of mortgages fell into that category, with homeowners owing more on their mortgages than the estimated value of their properties. Those with the highest underwater rates among the 51 most at-risk counties were Tangipahoa Parish, LA (east of Baton Rouge) (26.1 percent underwater); Peoria County, IL (16.3 percent); Lake County (Gary), IN (13.2 percent); Orleans Parish (New Orleans), LA (13.1 percent) and Montgomery County (Dayton), OH (10.9 percent).
More than one of every 1,000 residential properties faced a foreclosure action in the second quarter of 2024 in 39 of the 51 most vulnerable counties. Nationwide, one in 1,575 homes were in that position.
The highest foreclosure-case rates in those counties were in Charlotte County (Punta Gorda), FL (one in 464 residential properties facing possible foreclosure); Cumberland County (Vineland), NJ (one in 484); Sussex County, NJ (outside New York City) (one in 486); Dorchester County, SC (outside Charleston) (one in 513) and Gregg County (Longview), TX (one in 579).
The June 2024 unemployment rate was at least 5 percent in 35 of the 51 most at-risk counties, while the nationwide figure stood at 4.1 percent. The highest rates in those counties were all in central California: Merced County (9.4 percent); Kern County (Bakersfield) (9 percent); Kings County (outside Fresno) (8.5 percent); Madera County (outside Fresno) (7.5 percent) and Stanislaus County (Modesto) (7.1 percent).
Counties least at risk spread mainly throughout South and Midwest
Twenty-three of the 51 counties considered least vulnerable to housing market problems from among the 589 reviewed in the second-quarter report were in the South while 15 were in Midwest. The Northeast had 11 while the West had just two.
Virginia had eight of the least-at-risk counties in the second quarter: Alexandria City, Arlington and Fairfax and Loudoun, all in the Washington, DC, metro area; Chesterfield, Henrico and Richmond City in the Richmond, VA, area, and Albemarle County (Charlottesville).
Wisconsin also had eight. They were Brown County (Green Bay), Outagamie County (outside Green Bay), Dane County (Madison), Rock County (outside Madison), Eau Claire County, La Crosse County, Washington County (outside Milwaukee) and Winnebago County (Oshkosh). Five more were in Tennessee. They included Davidson, Rutherford and Williamson counties in the Nashville metro area, and Blount and Knox County in the Knoxville area.
Better market measures benefit less-vulnerable counties
Major ownership costs on median-priced single-family homes were seriously unaffordable in 18 of the 51 counties that were considered least vulnerable to market problems in the second quarter of 2024 (compared to 33 of the most at-risk counties).
The lowest levels were in Morgan County, AL (outside Huntsville) (23.9 percent of average local wages needed for major ownership costs); Dauphin County (Harrisburg), PA (25.2 percent); Richmond City/County, VA (25.9 percent); Shawnee County (Topeka), KS (27.3 percent) and Madison County (Huntsville), AL (27.8 percent).
More than 5 percent of residential mortgages were underwater in the second quarter of 2024 (with owners owing more than their properties were worth) in only six of the 51 least-at-risk counties. Those with the lowest rates were Chittenden County (Burlington), VT (1 percent underwater); Hillsborough County (Manchester), NH (1.7 percent); Rockingham County (Portsmouth), NH (1.7 percent); Williamson County, TN (outside Nashville) (1.8 percent) and Loudoun County, VA (outside Washington, DC) (1.8 percent).
More than one in 1,000 residential properties faced a foreclosure action during the second quarter of 2024 in none of the least-at-risk counties. Those with the lowest rates were Chittenden County (Burlington), VT (one in 73,209 residential properties faced possible foreclosure); Johnson County (Overland Park), KS (one in 25,211); Dane County (Madison), WI (one in 25,042); Medina County, OH (outside Akron) (one in 18,785) and Alexandria City/County, VA (one in 13,376).
The June 2024 unemployment rate was less than 4 percent in all of the least-at-risk counties. The lowest rates among those counties were in Chittenden County (Burlington), VT (1.9 percent); Arlington County, VA (2.2 percent); Merrimack County (Concord), NH (2.2 percent); Cass County (Fargo), ND (2.3 percent) and Cumberland County (Portland) ME (2.3 percent).
Report methodology
The ATTOM Special Market Impact Report is based on ATTOM’s second-quarter 2024 residential foreclosure, home affordability and underwater property reports, plus June 2024 unemployment figures from the U.S. Bureau of Labor Statistics. (Press releases for affordability, foreclosure and underwater-property reports show the methodology for each.) Counties with sufficient data to analyze were ranked based on the second-quarter percentage of residential properties with a foreclosure filing, the percentage of average local wages needed to afford the major expenses of owning a median-priced home and the percentage of properties with outstanding mortgage balances that exceeded their estimated market values, along with June 2024 county-level unemployment rates. Ranks then were added up to develop a composite ranking across all four categories. Equal weight was given to each category. Counties with the lowest composite rank were considered most vulnerable to housing market problems. Those with the highest composite rank were considered least vulnerable.
About ATTOM
ATTOM provides premium property data and analytics that power a myriad of solutions that improve transparency, innovation, digitization and efficiency in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include ATTOM Cloud, bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, making property data more readily accessible and optimized for AI applications– AI-Ready Solutions.
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