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These housing markets most at risk of downturn, new report says


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As the nation’s housing slowdown continues, some metro areas are at greater risk of a downturn than others, according to a recent analysis of nearly 600 U.S. counties.

Counties in states such as New Jersey, Illinois and California are the most exposed to housing market problems, with 33 of the report’s 50 most vulnerable counties in those three states, according to a second-quarter report from ‘Attom, a data provider property. The analysis considered factors such as home affordability, underwater properties, foreclosure deposits and unemployment.

While California, Illinois and New Jersey aren’t necessarily new to the list — counties in those three states accounted for 34 of the 50 most-at-risk markets in Atom’s first-quarter analysis — fears of a recession could make the ranking more timely than in previous quarters.

“The Federal Reserve has promised to be as aggressive as necessary to bring inflation under control, even if its actions lead to a recession,” Rick Sharga, executive vice president of economic intelligence at Attom, said in a statement. “Given little progress so far in reducing inflation, Fed actions look increasingly likely to push the economy into a recession, and some housing markets will be more vulnerable than others. others if that happens.”

Of the 575 counties analyzed, Passaic County, NJ, was the most vulnerable to a downturn, according to the analysis. The median house in Passaic costs around 52% of a buyer’s income, according to the analysis. The share of homes in the county considered underwater, in which homeowners owed more on their mortgage than their home was worth, was 7.1%, higher than the U.S. average of 5.9%, according to the study. The unemployment rate was also higher than the national average, at 9.5%.

The four most populous counties to be among the 50 most at risk are Cook County, Illinois; Kings County, New York; and Riverside and San Bernardino, both in California.

Markets in the South and Midwest, meanwhile, were most often among the 50 least vulnerable markets. These include Tennessee, with six counties on the list, and Wisconsin, with five. So far, the less risky regions overall have held up better amid a larger industry pullback. In July, the most recent month for which existing home sales data is available, sales in the Midwest and South fell less dramatically than those in the Northeast and West.

Chittenden, Vermont was the lowest risk market in the analysis. The county’s unemployment rate, at 3.3%, was below the national average, while its share of homes underwater was 1.3%. Still, houses here were relatively expensive: a buyer would have to spend around 44% of their income to afford a house in Chittenden, a share above the national average of around 32%, according to Attom.

Of the 50 least vulnerable markets, the four most populated included King County, Washington; Travis County, Texas; Salt Lake County, Utah and Wake County, North Carolina

Write to Shaina Mishkin at [email protected]