A recent study by ATTOM highlights the metro areas around Chicago, Illinois; New York City (New York); and inland California as facing significant housing market risks in the first quarter.
ATTOM, a real estate data company, released a Special Housing Risk Report analyzing counties in the US vulnerable to market downturns from January to March due to factors like home affordability and underwater mortgages.
The study revealed concentrated risk in California and Illinois, while Southern and Midwestern counties were less susceptible. A housing market downturn, different from a crash, may occur when prices drop due to declining demand, affecting property values for homeowners.
California, Illinois, and other states showed heightened housing vulnerability across 34 counties, with risks ranging from high foreclosure rates to excessive mortgage balances compared to property values.
While these findings don’t predict market decline, they serve as an indicator of vulnerability. Some metro areas may be better equipped than others for potential market fluctuations.
The analysis covered 590 US counties, including those in Illinois, Indiana, New York, and New Jersey, showcasing various risk factors such as foreclosure threats and unbalanced ratios of mortgage to income.
Some counties reported residents spending over a third of their local average wages on housing costs in the first quarter of the year, surpassing the national average of 32.3%.
Counties like Kings County in New York, El Dorado County in California, and Webb County in Texas stood out for high home cost ratios to average wages, along with areas like Peoria County in Illinois facing subprime mortgage challenges.
Notable foreclosure rates were observed in counties like Osceola in Florida, Cumberland County in New Jersey, and Warren County near Allentown, Pennsylvania, adding to the housing market risk landscape.
Vulnerable counties spanned across states like Virginia, Wisconsin, Tennessee, and Kentucky, showcasing the widespread implications of housing market risks.