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These vulnerable areas are concentrated in four states, according to the findings.
Housing markets in California, New Jersey and Illinois are at the greatest risk of turmoil in the months ahead, according to a new report.
Of the 50 counties most likely to see trouble, the majority are in California and the New York City, Chicago and Philadelphia metropolitan areas, according to an analysis by Attom, which describes itself as a curator of nationwide real estate data.
That conclusion is based on the percentage of homes facing possible foreclosure, mortgage balances that are higher than estimated property values, how average local wages compare to homeownership costs, and local unemployment rates.
The analysis found that, in the second quarter of this year, 13 counties in California, nine in and around New York City and six in the Chicago metro area were home to the most “vulnerable” housing markets in the country.
The findings come as red hot home sales during the past two years slow amid rising interest rates for mortgages.
Counties Where the Most Vulnerable Housing Markets are Concentrated
- California: Butte, Humboldt, Shasta, Solano, Fresno, Kings, Madera, Merced, San Joaquin, Tulare, Kern, Riverside and San Bernardino.
- New York metropolitan area: Kings and Richmond, which cover Brooklyn and Staten Island, as well as Rockland, north of New York City; Bergen, Essex, Ocean, Passaic, Sussex, Union in New Jersey.
- Chicago metropolitan area: Cook, Kane, Kendall, McHenry and Will in Illinois and Lake in Indiana.
- Philadelphia Metropolitan area: Philadelphia in Pennsylvania, along with Camden and Gloucester in New Jersey.
Forty of the 50 most at-risk counties had more than one in 1,000 residential properties face a foreclosure action in the second quarter of 2022. By comparison, the same was true nationally for one in 1,559 properties.
Major homeownership costs for median priced single-family homes–including mortgage payments, property taxes and insurance–consumed more than one-third of average local wages in 35 of the most at-risk counties.
In 23 of the 50 most at-risk counties, at least 7% of residential mortgages were “underwater,” meaning the mortgage balances were higher than estimated property values. Nationwide, that figure is just under 6%.
New York’s Rockland County had the highest rate of underwater mortgages at 19.2%.
Least Vulnerable Housing Markets
Of the 50 least vulnerable markets, 14 are in midwest counties and 25 are in the south, according to the report.
The largest share are in Tennessee, where six counties were considered to be low risk, including three in the Nashville metro area. Five were in Wisconsin and four were in Arkansas.
To read the full report, click here.
Molly Bolan is the assistant editor for Route Fifty.