Housing markets across the country have stalled due to elevated mortgage rates and limited for-sale inventory, but some counties are at risk of a more dramatic downturn.
That’s according to a report released Thursday by Attom, which concluded that areas around New York City, Chicago and inland California are most at risk of a housing downturn, while areas in the South and Midwest are less vulnerable.
“The housing market boom continues to gain momentum, thanks to another [seasonal] boost,” Attom CEO Rob Barber said in a statement. “However, some markets show signs of potential instability, which suggests a mixed level of risk, particularly in certain regions that repeatedly show signs of concern.
“While these observations don’t indicate immediate red flags or warning signs of an impending downturn, they do highlight areas of relative risk.”
Attom’s quarterly report analyzes county-level data on affordability, underwater mortgages, foreclosures and unemployment to determine which counties and metro areas are vulnerable to a downturn. The second-quarter 2024 report looked at 589 counties.
Seven counties in the New York City area, five in Chicago and 12 in inland California topped the list. These same areas, by and large, have led the nation in downturn risk over the past five years. At the other end of the spectrum, metros that posed the lowest risks included Washington, D.C.; Richmond, Virginia; and Nashville.
Different factors impact downturn risk in different counties. Homeownership costs like mortgage payments, property taxes and insurance were compared to local income levels. The counties that fared the worst on these metrics were Brooklyn, New York; Riverside, California; Washington County, Utah; Staten Island, New York; and Passaic County, New York.
The counties with the highest rates of underwater mortgages are Tangipahoa Parish, Louisiana; Peoria County, Illinois; Lake County, Indiana; New Orleans; and Montgomery County, Ohio.
The counties with the highest foreclosure rates are Charlotte County, Florida; Cumberland County, New Jersey; Sussex County, New Jersey; Dorchester County, South Carolina; and Gregg County, Texas.
Unemployment also factors into Attom’s study, and most of the at-risk markets in this category are in California.
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