Releasing its new Special Housing Risk Report, ATTOM Data [1] spotlights county-level data revealing that areas in California, Illinois, and New Jersey have the highest concentrations of counties that are in danger of economic declines in the near future.
Basing their findings on affordably numbers, local unemployment rates, underwater mortgages, and recorded foreclosures, counties near Chicago, New York City, and inland-California were the most at risk of seeing declines, accounting for 34 of the top 50 counties included in this report. The 50 most at-risk included eight counties in the Chicago metropolitan area, six near New York City and 10 sprinkled throughout northern, central and southern California.
While the West, Mid-West, and East saw the highest number of counties that were in danger of decline, the South posted the best numbers among the four major regions.
“While the housing market has been exceptionally strong over the past few years, that doesn’t mean there aren’t areas of potential vulnerability if economic conditions continue to weaken,” said Rick Sharga [2], EVP of Market Intelligence at ATTOM. “Housing markets with poor affordability and relatively high rates of unemployment, underwater loans, and foreclosure activity could be at risk if we enter a recession or even face a more modest downturn.”
“The housing market has been one of the strongest components of the U.S. economy since the onset of the COVID-19 pandemic,” Sharga noted. “But Federal Reserve actions aimed at bringing inflation down from its 41-year high are having an immediate impact on home affordability, sales, and pricing. Whether the Fed can execute a relatively soft landing, or inadvertently steers the economy into a recession will determine the fate of the housing market over the next 12-18 months.”
Most-vulnerable counties clustered in the Chicago, New York City, Cleveland and Philadelphia areas, along with Delaware and sections of California
- Thirty-two of the 50 U.S. counties most vulnerable in the first quarter of 2022 to housing market troubles (from among 586 counties with enough data to be included in the report) were in the metropolitan areas around Chicago, Ilinois; New York, New York; Cleveland, Ohio, and Philadelphia, Pennsylvania, and as well as in Delaware and interior California.
- They included eight in Chicago and its suburbs (Cook, De Kalb, Kane, Kendall, Lake, McHenry and Will counties in Illinois and Lake County, Indiana) and six in the New York City metropolitan area (Bergen, Essex, Ocean, Passaic, Sussex and Union counties in New Jersey). The three in the Philadelphia, Pennsylvania, area were Philadelphia County, plus Camden and Gloucester counties in New Jersey, while the three in the Cleveland area were Cuyahoga, Lake and Lorain counties in Ohio. Kent County (Dover), Delaware, and Sussex County (Georgetown), Delaware, also were among the top 50 most at-risk in the first quarter.
- In other states, California had 10 counties in the top 50 list: Butte County (Chico), San Joaquin County (Stockton), Shasta County (Redding), and Solano County (outside Sacramento) in the northern part of the state; Fresno County, Kings County (outside Fresno), Madera County (outside Fresno), Merced County (outside Modesto), and Stanislaus County (Modesto) in central California, and Kern County (Bakersfield) in the southern part of the state.
- Maryland had also three among the top 50. They were Baltimore County, Charles County (outside Washington, DC) and Prince George’s County (also outside Washington, DC).
Lower levels of underwater mortgages, foreclosure activity and unemployment in least-vulnerable counties
- Less than 5% of residential mortgages were underwater in the first quarter of 2022 (with owners owing more than their properties are worth) in 31 of the 50 least at-risk counties. Among those counties, those with the lowest rates among those counties were Williamson County, Tennessee (outside Nashville) (1.5% of mortgages underwater); San Mateo County, California (outside San Francisco) (1.6%); Chittenden County (Burlington), Vermont (1.7%); Santa Clara County (San Jose), California (1.9%); and Travis County (Austin), Texas (1.9%).
- Less than one in 5,000 residential properties faced a foreclosure action during the first quarter of 2022 in 27 of the 50 least at-risk counties. Those with the lowest rates in those counties were Chittenden County (Burlington), Vermont (no residential properties facing possible foreclosure); Washington County, Rhode Island (outside Providence) (one in 32,847); Johnson County (Overland Park), Kansas (one in 22,880); Boone County, Kentucky (outside Cincinnati, OH) (one in 17,156) and Arlington County, Virgina (outside Washington, DC) (one in 17,012).
- The March 2022 unemployment rate was more than 5 percent in none of the 50 most at-risk counties. The lowest levels among the top 50 counties were in Shelby County, Alabama (outside Birmingham) (1.6%); Chittenden County (Burlington), Vermont (1.6%); Davis County, Utah (outside Salt Lake City) (1.9%); Limestone County, Alabama (outside Huntsville) (1.9%); and Williamson County, Tennessee (outside Nashville) (1.9%).