ATTOM Data has released a Special Housing Impact Report highlighting how the recent downturn in the U.S. housing market is starting to affect counties across the country based on data from the first quarter of 2023 showing that the Western region of the country—along with a smattering of other high-priced communities—beared a greater slowdown brunt compared to lower-priced areas of the country.
In addition, those areas experiencing larger-than-average declines in home values are more likely to see homeowners that are underwater or facing some sort of foreclosure filing.
The trends seen in the first quarter of this year—based on changes in home price, home affordability, underwater mortgages and foreclosures since the second quarter of 2022—revealed that almost half of the 50 counties seeing the biggest impact were in the West. Among the top 50, 12 were in Oregon and Washington.
Middle-priced markets, or those valued at about $350,000, also saw reduced property values, but were more in line with expectations.
At the other end of the spectrum, the South, Midwest and Northeast were seeing less fallout along with lower-priced markets. States in those regions, led by Texas, Connecticut and Illinois, had 18 of the 50 counties showing the smallest effects from the pullback that hit last year after a decade of nearly unceasing gains in prices, profits and other key measures.
"We are starting to see some patterns that show where the U.S. housing market is cooling off and how it's hitting homeowners based on some key metrics. It looks so far—and it's important to stress, so far—to be having more impact in places with the highest housing costs and less impact elsewhere," said Rob Barber, CEO at ATTOM. "This doesn't mean those markets are in danger of a big fall while others are immune, but the data does provide a useful geographical snapshot of the initial market dip."
Counties were considered affected by the market slowdown based on changes from the second quarter of 2022 to the first quarter of 2023 in four categories: median home prices, the number of homes facing foreclosure filings, percentage of wages paid towards housing, and the portion of underwater homes. The conclusions in this report were all based on recently published data by ATTOM using internal data. All 572 counties in the country with sufficient data were graded in this report.
The new trends reflect a period when the housing market endured three straight quarters of flat or negative performance for the first time in more than a decade, as prices, seller profits and homeowner equity fell in most of the country while foreclosure activity rose. That happened as average home-mortgage rates doubled to more than 6% for a 30-year fixed-rate loan, inflation was as high as 9%, the stock market faltered, and economic uncertainty increased, even amid a period of historically high employment.
As interest rates have stabilized recently, inflation has also eased (but is well above the 2% target mark), and the stock market has stabilized, an improved Spring and Summer buying seasons—typically the hottest buying time during the year—there is a chance of an improving market, possibly breaking the streak of three negative quarters.
According to ATTOM, as with past ATTOM-based reports on potential downturns, the gaps in the impact from the market drop-off do not suggest significant problems for housing markets anywhere in the nation. What they do show is different impacts in different local markets.
To view the report in its entirety, including breakdowns for notable counties, click here.