IRVINE, CA — A new Special Housing Risk Report from ATTOM identifies the U.S. housing markets at greatest risk for declines, based on factors like affordability, foreclosure rates, and unemployment. The findings highlight regional disparities, with areas in California, Illinois, and the New York City metro ranking among the most vulnerable, while parts of the Midwest, Northeast, and South showed signs of resilience.
Regional Disparities in Risk
Of the 50 counties deemed most at risk in the fourth quarter of 2024, more than two-thirds were concentrated in California, Florida, Illinois, and the New York City area. California alone accounted for 14 counties, primarily inland regions such as Riverside, San Bernardino, and Fresno. Florida contributed seven, including Pasco County (outside Tampa) and Charlotte County (Punta Gorda), while Chicago’s metro counties and several from New York City rounded out the list.
By contrast, areas with the least exposure were clustered in Wisconsin, Tennessee, Pennsylvania, and Virginia. Counties such as Dane County (Madison, WI), Davidson County (Nashville, TN), and Dauphin County (Harrisburg, PA) were among the 51 counties identified as least vulnerable, showcasing a stark difference in housing market dynamics.
Defining Market Vulnerability
Four key factors influenced a county’s risk ranking:
- Affordability: Counties where homeownership costs consumed more than 43% of average wages were considered highly unaffordable. The most at-risk included Kings County (Brooklyn, NY), where costs consumed over 106% of wages, and Riverside County, CA, at 70%.
- Underwater Mortgages: Nationally, 5.7% of homeowners owed more on their mortgages than their properties were worth. However, in markets like Pasco County, FL, and Baltimore, MD, this figure climbed above 15%, contributing to heightened risk levels.
- Foreclosures: Counties with higher foreclosure rates, such as Charlotte County, FL, saw one in every 198 homes facing foreclosure proceedings, compared to the national average of 1 in 1,671.
- Unemployment Rates: Unemployment exceeded 5% in half of the most at-risk counties, with Kern County (Bakersfield, CA) and Kings County (outside Fresno) reporting rates as high as 7.9%.
Resilient Markets Shine
Counties considered least susceptible to declines had better affordability metrics, fewer underwater mortgages, lower foreclosure rates, and lower unemployment. For instance, Cumberland County, PA, boasted just 25.5% of average wages dedicated to homeownership costs, alongside foreclosure rates as low as 1 in every 36,385 homes.
Implications for Buyers and Sellers
The report underscores a sustained divergence in housing market conditions across the U.S., shaped by affordability pressures, economic indicators, and localized market dynamics. While high mortgage rates and elevated home prices in risk-prone markets may temper future growth, robust employment and housing supply constraints continue to provide momentum in less vulnerable regions.
According to ATTOM CEO Rob Barber, the report sheds light on variables that can influence local home values, foreclosures, and equity. “Local housing markets fluctuate in and out of vulnerability lists quarter by quarter, but longstanding economic gaps often define consistent patterns,” Barber said.
Future Trends to Watch
As the national housing market heads into the spring buying season, many forces will shape its trajectory. Rising mortgage rates and affordability issues could slow demand, particularly in markets already fraught with high costs. However, tight housing inventories and strong buyer interest in resilient regions could offset declines elsewhere, sustaining overall market activity.
The findings present a nuanced picture of the housing market, where risks and opportunities coexist, requiring careful navigation by buyers, sellers, and policymakers alike.
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