- Coastal housing markets, including California, New Jersey, Illinois, and Florida, are more susceptible to a downturn, according to an ATTOM report.
- Major drivers include affordability issues, foreclosure filings, unemployment rates, and underwater mortgages.
- The South demonstrates greater stability, with nearly half of the least vulnerable counties in Southern states.
Housing markets in coastal states like California, New Jersey, Illinois, and Florida are increasingly at risk of a downturn, according to a recent report of 578 US Counties by ATTOM.
Rising affordability challenges, higher foreclosure rates, unemployment, and mortgage distress drive this vulnerability, while many southern markets maintain stability amidst national housing pressures, reported GlobeSt.
Region by region
Two-thirds of the 50 most vulnerable counties are near major metro areas, including Chicago, NYC, and California’s Inland Empire:
- California’s at-risk counties spanned diverse regions, including Kern and Merced Counties in the Central Valley and San Bernardino and Riverside Counties in the south.
- After prior reports showed fewer vulnerabilities, Florida reappeared on the high-risk list, with several coastal counties exhibiting signs of strain.
- While coastal regions face growing vulnerabilities, the South remains resilient. Nearly half of the 50 least risky counties were in Southern states (like Tennessee, Virginia, and Alabama) that benefit from better affordability and fewer foreclosure pressures.
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The Numbers Behind the Risk
Four key indicators shaped the rankings:
- Affordability Stress: In 30 of the 50 most vulnerable counties, major ownership costs consumed more than 43% of local wages, well above the national average of 34%. Brooklyn’s Kings County led the list, with housing costs exceeding 108% of local wages.
- Foreclosures: In 35 of the riskiest counties, 1 in 1K homes faced foreclosure, compared to the national average of one in 1.62K.
- Underwater Mortgages: St. Clair County, IL, reported the highest rate of underwater mortgages at 15%. Nationwide, 23 of the riskiest counties saw over 6% of homes in distress.
- Unemployment: Risk-prone counties averaged unemployment rates above the 4.2% national average.
Broader Implications
The findings underscore a growing disparity in housing market health. Coastal markets face mounting risks tied to homeownership costs and economic pressures, while many southern markets maintain stability despite national housing challenges.
As housing markets navigate post-boom adjustments, affordability and regional economic resilience will play crucial roles in determining the trajectory of local markets.
