Skip to main content

Housing Markets In New Jersey, Illinois and California Are Most Vulnerable To Pandemic Impact

Katie Jensen
Jan 20, 2022
underwater mortgage

New Jersey, Illinois and California contained 31 of the 50 counties most vulnerable to the potential economic impact of the pandemic.

KEY TAKEAWAYS
  • The report shows that New Jersey, Illinois and parts of California had the highest concentration of at-risk markets in the fourth quarter, with the biggest clusters in New York and Chicago areas.
  • The West remained far less exposed outside of California. 
  • The rest of the top 50 counties were scattered mainly along the East Coast, including 2 of Delaware's 3 counties and 3 counties in the Philadelphia, PA, metro area.
  • Despite recent price run-ups, there are a few signs of a possible market slowdown – one being the decline in home affordability, slumping investor profits and rising inflation.

The pandemic has left a long-lasting impact on the country, but researchers from ATTOM have found that some counties suffered more of an economic impact than others. ATTOM’s fourth-quarter 2021 Special Coronavirus Report highlights county-level housing markets from around the country that are more or less vulnerable to damage from the ongoing Covid-19 pandemic. 

The report shows that New Jersey, Illinois and parts of California had the highest concentration of at-risk markets in the fourth quarter, with the biggest clusters in New York and Chicago areas. The West remained far less exposed outside of California. 

New Jersey, Illinois and California contained 31 of the 50 counties most vulnerable to the potential economic impact of the pandemic. This included 8 counties in the Chicago metro area, 8 near New York City and 7 spread throughout northern, central and southern California.

The rest of the top 50 counties were scattered mainly along the East Coast, including 2 of Delaware's 3 counties and 3 counties in the Philadelphia, PA, metro area.

Outside of California, no other western counties made it into the top 50 during the fourth quarter of last year. Rather, the West region had the highest concentration of markets considered least vulnerable to pandemic-related damage.

Markets were evaluated on risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, and the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes. 

The disparity in pandemic-related risks stayed in place during the fourth quarter of 2021, even as a decade-long boom in the broader U.S. market continued roaring ahead.

Prices climbed more than 10% in most of the nation last year because or in spite of the ongoing pandemic that slowed major sectors of the economy in 2020. Since then, a surge of buyers flooded the market due to historically low interest rates and the desire to find safety from the pandemic in larger, rural areas. As consumers continue to chase the low supply of homes, prices have soared. 

Despite recent price run-ups, there are a few signs of a possible market slowdown – one being the decline in home affordability, slumping investor profits and rising inflation. The pandemic still remains a threat, however, as the third wave sweeps across the U.S.

"The U.S. housing market keeps powering on, despite the Coronavirus pandemic that's still raging across the country. Indeed, home prices keep rising in part because of the crisis," said Todd Teta, chief product officer with ATTOM. "Nevertheless, the virus remains a potent threat to the broader economy and the housing market, with some of the same counties we've seen in the past continuing to look vulnerable to potential downturns. No immediate warning signs hang over any one part of the country, but pockets are more vulnerable to the market taking a turn for the worse."

Out of the top 50 counties most vulnerable to the economic impact of the coronavirus, 28 of them were in the New York, NY, Chicago, IL, and Philadelphia, PA, metro areas, as well as in Delaware and California.

In California, 7 counties made the top list, including: Butte County (Chico), El Dorado County (east of Sacramento), Humboldt County (Eureka) and Shasta County (Redding) in the northern part of the state; as well as Kern County (Bakersfield), Madera County (outside Fresno) and Riverside County (east of Los Angeles) in the central and southern sections of the state.

Meanwhile, the counties most at-risk have higher levels of unaffordable housing, underwater mortgages and foreclosures were in Rockland County, NY (outside New York City) (57.9% of average local wages needed for major ownership costs); El Dorado County, CA (east of Sacramento) (52.5%); Riverside County, CA (east of Los Angeles (52%); Bergen County, NJ (outside New York City) (47.6% and Passaic County, NJ (outside New York City) (44.7%). Nationwide, major expenses on typical homes sold in the fourth quarter required 25.2% of average wages.

At least 10% of mortgages were underwater in the third quarter last year in 18 of the 50 most at-risk counties. Nationwide, 7.1% of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Kennebec County (Augusta), ME; Webb County (Laredo), TX; Kankakee County, IL (outside Chicago); Saint Clair County, IL (outside St. Louis, MO) and Cumberland County (Fayetteville), NC.

More than 1 in 1,500 residential properties faced a foreclosure action in the fourth quarter of 2021 in 36 of the 50 most at-risk counties. Nationwide, one in 2,446 homes were in that position. Foreclosure activity has risen since the federal moratorium ended on July 31, 2021, and lenders could take back properties from homeowners who fell behind on their mortgages. The highest rates in the top 50 counties were in Saint Clair County, IL (outside St. Louis, MO) (one in 121 residential properties facing possible foreclosure); Camden County, NJ (outside Philadelphia, PA) (one in 606); Sussex County, NJ (outside New York City) (one in 709); Cumberland County, NJ (outside Philadelphia, PA) (one in 743) and Cook County (Chicago), IL (one in 757).

Published
Jan 20, 2022
NAR: Pending Home Sales Fell For 5th Straight Month

Realtor.com expects sales in 2023 to be down overall as well.

Analysis and Data
Nov 30, 2022
What Recession? Revised 3Q GDP Rose 2.9%

The Bureau of Economic Analysis' original estimate was 2.6%.

Analysis and Data
Nov 30, 2022
Mortgage Applications Fell During Holiday Week

Third straight weekly decline in rates not enough to improve refi activity.

Analysis and Data
Nov 29, 2022
MBA Revises Originations Forecast Downward For 2023

Now predicts lenders will originate $1.98 trillion overall in mortgages in 2023, down 12% from 2022 and down 3.5% from its October forecast.

Analysis and Data
Nov 29, 2022
Home Price Growth Continued To Slow In 3Q

FHFA, S&P Case-Shiller indexes show slower monthly and annual growth in prices.

Analysis and Data
Nov 29, 2022
First American: Real House Prices Up Yet Again

The monthly RHPI report said potential sellers are unlikely to lose all the equity they have gained.

Analysis and Data
Nov 28, 2022