Revealed – the most vulnerable housing markets in the US

ATTOM names areas with highest concentration of at-risk counties

Revealed – the most vulnerable housing markets in the US

A number of housing markets around the US were found to be especially vulnerable to declines based on home affordability, underwater mortgages, foreclosures, and unemployment, according to data from ATTOM’s special housing risk report.

Based on recorded patterns for the first quarter of 2022, ATTOM found that New Jersey, Illinois and California had 34 of the 50 counties most vulnerable to potential declines. The Chicago area had eight of these 50 counties and six were near New York City. Ten of the counties on the list were scattered across northern, central, and southern California.

The rest of the 50 most vulnerable counties in ATTOM’s report were along the East Coast and the Midwest, including three in Cleveland, OH, three in Philadelphia, PA, and two in Delaware.

Areas in the South, meanwhile, had the highest concentration of markets least vulnerable to housing market declines.

“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,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Housing markets with poor affordability and relatively high rates of unemployment, underwater loans, and foreclosure activity could be at risk if we enter a recession or even face a more modest downturn.”

ATTOM determined its rankings based on the percentage of homes facing possible foreclosure, the portion with mortgage balances exceeding estimated property values, the percentage of average local income required to cover home ownership expenses, and local unemployment rates.  

“The housing market has been one of the strongest components of the US economy since the onset of the COVID-19 pandemic,” added Sharga. “But Federal Reserve actions aimed at bringing inflation down from its 41-year high are having an immediate impact on home affordability, sales, and pricing. Whether the Fed can execute a relatively soft landing, or inadvertently steers the economy into a recession will determine the fate of the housing market over the next 12-18 months.”