Analyzing the Housing Market Landscape: Vulnerable and Resilient Regions in the US

In a recent report by ATTOM, the state of county-level housing markets in the United States has been brought to light. The Special Housing Risk Report for the third quarter of last year delves into various factors such as home affordability, foreclosures, and underwater mortgages to identify regions more or less vulnerable to declines.

California, New Jersey, and Illinois have emerged as the states with the highest concentrations of the most at-risk markets in the country. The epicenters of vulnerability are in the New York City and Chicago areas, along with central California. These areas show significant susceptibility based on home affordability, foreclosures, and underwater mortgages.

The report reveals a concerning trend, with California, New Jersey, and Illinois accounting for 33 out of the 50 counties deemed most vulnerable to potential drop-offs. The concentration in these states raises questions about the stability of their housing markets. The New York City and Chicago areas, along with central California, are particularly noteworthy for their heightened vulnerability.

Despite improvements in home prices and homeowner equity, concerns arise due to worsening home affordability and increased foreclosure activity. The intricate patterns derived from gaps in home affordability, underwater mortgages, foreclosures, and unemployment underscore the complexity of the current real estate landscape.

The report highlights regional disparities, with the South, Midwest, and Northeast hosting less-vulnerable markets. The South stands out as having the most markets considered least likely to decline, followed by the Midwest and a group of states in New England.

Rob Barber, CEO at ATTOM, emphasizes the need for caution when interpreting the data. Being on the most-vulnerable list doesn’t necessarily signal an imminent crash for any local market. Instead, it indicates greater potential tripwires that could lead to a decline. These areas warrant continued observation, especially given the overall mixed trends in the market.

The pulse of housing market troubles is notably strong in specific metropolitan areas, with Chicago, New York City, and central California emerging as epicenters of concern. Among the 578 counties with sufficient data for analysis, 21 of the 50 most vulnerable U.S. counties in the third quarter of 2023 are clustered in these regions.

New York City faces vulnerability with three of its counties featured on the list, along with suburbs contributing to the area’s heightened risk. The Chicago metropolitan area is also a focal point of concern, with seven counties on the list. Central California, encompassing several counties, faces notable vulnerability as well.

Beyond the key metropolitan areas, the top-50 list extends its reach to various other regions, including northern and southern California, as well as the Philadelphia metro area. Tennessee, Wisconsin, Virginia, and the Boston metropolitan area are highlighted as regions with resilient housing markets, showcasing attributes such as robust employment and lower foreclosure rates.

Overall, the report sheds light on the nuanced state of county-level housing markets in the U.S., emphasizing the need for continued monitoring and caution in interpreting the data to navigate potential risks and opportunities in the real estate landscape.