California, New Jersey, and Illinois are in the spotlight once again for having the highest concentrations of most-at-risk markets in the country, according to the Special Housing Risk Report from ATTOM. The report shows county-level housing markets that are more or less vulnerable to declines, based on home affordability, underwater mortgages and other measures in the first quarter of 2024.
"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.
Those three states had 34 of the 50 counties around the U.S. considered most exposed to potential drop-offs. Over the past few years, those concentrations have continued dominating the list of metropolitan areas more at risk of downturns. Some of the biggest clusters were in the New York City and Chicago areas, as well as inland California. Six were in and around Chicago, five in the New York City metropolitan area, and 14 in areas of California mostly away from the Pacific coast. The rest were scattered around other parts of the country.
At the other end of the spectrum, 22 of the 50 markets considered least likely to decline were in Virginia, Wisconsin, and Tennessee. That included four each in the Washington, DC, and Richmond, VA, metro areas.
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 homeownership expenses on median-priced single-family homes
- local unemployment rates
Following a year when various market metrics - including home prices, profits, equity and affordability – tracked lower or cooled off across much of the nation, varying levels of risk continued to show up across the country in the first quarter of 2024.
"Once again, this is not to suggest that any one market is facing imminent decline. It's more a measure of vulnerability gaps,” Barber said. “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."
