Though the housing market seems to have escaped many of the economic effects of the pandemic, certain areas are feeling more pain than others.
The West and Midwest are less likely to suffer COVID-related economic ruin than pockets of the Northeast and Mid-Atlantic regions, which analysts predict will be more vulnerable during the third quarter of the year, according to AATOM Data Solutions, a provider of property-related data and analysis. Its report showed clusters in New York City, Baltimore, Philadelphia, and Washington D.C. also are at greater risk during Q3.
ATTOM on Wednesday released its third-quarter 2020 Special Report "spotlighting county-level housing markets around the United States that are more or less vulnerable to the impact of the Coronavirus pandemic," the company announced.
Of the 50 most vulnerable counties, 32 were spread among Connecticut, New York, New Jersey, Pennsylvania, Maryland, and Delaware.
These included five suburban counties in the New York City metropolitan area, four around Washington, D.C., four in the vicinity of Philadelphia, PA, four around Baltimore, MD, and seven of Connecticut’s eight counties.
Just four western counties presented among the top 50 (in northern California and Hawaii) while Illinois had the only six in the Midwest. Another eight were strewn across the southern states of Florida, Louisiana, North Carolina, Texas, and Virginia.
Q3 trends generally were similar to first and second quarter results, but with different concentrations around several major metropolitan areas.
"The number of counties among the top 50 most at-risk was down from 11 to five in the New York City area, and from eight to three in the Chicago, IL, area," AATOM reported, "but up from two to four in the Baltimore region."
Markets are considered more or less "at risk," AATOM representatives say, "based on the percentage of homes currently facing possible foreclosure, the portion of homes with mortgage balances that exceed the estimated property value, and the percentage of local wages required to pay for major home ownership expenses."
Its conclusions derive from an analysis of AATOM's previously published home affordability index, equity, and foreclosure reports.
A combination of those three categories in 487 counties around the United States with sufficient data to analyze help analysts determine rankings. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the three ranks. The complete methodology can be read on ATTOM's website.
ATTOM underscores that its findings correlate with the national housing markets general success when it comes to staving off the effects of COVID-19. As the study indicates, home values have dipped in certain areas, counties in general have seen a 7% rise in prices since Q3 2019. However, high unemployment and other COVID-related damages to the economy means the market remains at risk.
"The U.S. housing market continues to show remarkable resilience during a time of widespread economic trouble and high unemployment stemming from the virus pandemic. But amid continued price gains, pockets around the country face greater risk of a fall, especially in and around the Northeast,” said Todd Teta, chief product officer with ATTOM Data Solutions. “There is much uncertainty ahead, especially if another virus wave hits. We will continue to closely monitor home prices and sale patterns to see if, how and where the pandemic starts rattling local markets.”
In the highest risk areas, data showed higher levels of unaffordable housing, underwater mortgages and foreclosure activity in most-at-risk counties, AATOM reported.
"Major home ownership costs (mortgage, property taxes and insurance) consumed more than 30 percent of average local wages in 35 of the 50 counties that were most vulnerable to market problems connected to the virus pandemic in the third quarter of 2020." Visit the full report to see areas in this category.
The reverse was applicable in lower-vulnerability regions. (View the report to see which areas were lowest).
At least 15% of mortgages were underwater (in the latest data available on owners owing more than their properties are worth) reportedly are in 37 of the 50 most at-risk counties.
More than one in 2,500 residential properties faced a foreclosure action in Q2 2020 (the latest available data) in 36 of the 50 most at-risk counties.
“While it’s unlikely that we’ll see a return to the historically high levels of foreclosure activity we saw during the Great Recession, it’s a near-certainty that the number of defaults will increase once the foreclosure moratoria have been lifted, and the CARES Act forbearance program expires,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “It’s also likely that foreclosures will be concentrated in markets where there’s a dual-trigger. For example, stubbornly high unemployment rates, and homeowners who are underwater on their loans.”
For the full detail of the most and least vulnerable places in America, visit the full report at AATOM.com.