By releasing its new special report on housing risks, ATTOM data highlights county-level data revealing that areas of California, Illinois, and New Jersey have the highest concentrations of counties at risk of economic decline in the near future.
Basing their findings on affordable numbers, local unemployment rates, underwater mortgages and recorded foreclosures, counties near Chicago, New York and inland California were most at risk of seeing declines. , representing 34 of the top 50 counties included in this report. The 50 most at risk included eight counties in the Chicago metro area, six near New York and 10 spread across northern, central and southern California.
While the West, Midwest and East had the highest number of counties at risk of decline, the South had 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,” he said. Rick Sharga, EVP Market Intelligence at ATTOM. “Housing markets with low affordability and relatively high unemployment rates, underwater lending 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 the Federal Reserve’s actions to bring inflation down from its 41-year high are having an immediate impact on affordability, sales and home prices. Whether the Fed can execute a relatively soft landing or inadvertently drag the economy into a recession will determine the fate of the housing market over the next 12-18 months.
Most vulnerable counties grouped in the Chicago, New York, Cleveland and Philadelphia areas, as well as Delaware and sections of California
- Thirty-two of the 50 U.S. counties most vulnerable in Q1 2022 to housing market turmoil (among 586 counties with enough data to be included in the report) were in metropolitan areas around Chicago, Ilinois; New York, New York; Cleveland, Ohio and Philadelphia, Pennsylvania, as well as 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 metropolitan area (Bergen, Essex, Ocean , Passaic, Sussex and Union counties in New Jersey). The three in the Philadelphia, Pennsylvania area were Philadelphia County, as well as 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 were also among the top 50 countries at highest 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 also had three in the top 50. These 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 less vulnerable counties
- Less than 5% of residential mortgages were underwater in the first quarter of 2022 (homeowners owing more than the value of their properties) in 31 of the 50 lowest-risk counties. Of these counties, those with the lowest rates among these counties were Williamson County, Tennessee (outside of Nashville) (1.5% of mortgages underwater); San Mateo County, CA (outside San Francisco) (1.6%); Chittenden County (Burlington), Vermont (1.7%); Santa Clara County (San Jose), CA (1.9%); and Travis County (Austin), Texas (1.9%).
- Fewer than one in 5,000 residential properties faced foreclosure action in the first quarter of 2022 in 27 of the 50 lowest-risk counties. Those with the lowest rates in these counties were Chittenden County (Burlington), Vermont (no residential property subject to 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, Virginia (outside Washington, DC) (one in 17,012).
- The unemployment rate in March 2022 was not above 5% in any of the 50 most at risk counties. The lowest levels among the top 50 counties were in Shelby County, Alabama (outside of 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%).