As the nation’s slowdown in housing activity continues, some metropolitan areas are more at-risk of downturns than others, according to a recent analysis of nearly 600 US counties.
Counties in states such as New Jersey, Illinois, and California, are most at-risk of housing market problems, with 33 of the report’s 50 most-vulnerable counties in these three states, according to a second-quarter report from Attom, a property data provider. The analysis considered factors such as home affordability, underwater properties, foreclosure filings, and unemployment.
While California, Illinois, and New Jersey aren’t necessarily new to the list—counties in those three states comprised 34 of the 50 most at-risk markets in Attom’s first-quarter analysis—fears of a recession could make the ranking more timely than in previous quarters.
“The Federal Reserve has promised to be as aggressive as it needs to be in order to get inflation under control, even if its actions lead to a recession,” Rick Sharga, Attom’s executive vice president of market intelligence, said in a statement. “Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens.”
Of the 575 counties analyzed, Passaic County, NJ, was most vulnerable to a downturn, according to the analysis. The median home in Passaic costs about 52% of a buyer’s income, the analysis found. The county’s share of homes considered underwater, in which owners owed more on their mortgage than their house was worth 7.1%, greater than the US average of 5.9%, the study said. The unemployment rate was also higher than the national average, at 9.5%.
The four most populous counties to appear among the 50 most at-risk include Cook County, Illinois; Kings County, New York; and Riverside and San Bernardino, both in California.
Markets in the south and Midwest, meanwhile, appeared most frequently among the 50 least-vulnerable markets. These include Tennessee, with six counties on the list, and Wisconsin, with five. So far, the regions broadly at less risk have held up best amid a larger industry pullback. In July, the most recent month for which existing-home sales data is available, sales in the Midwest and south fell less dramatically than those in the Northeast and West.
Chittenden, Vermont, was the least at-risk market in the analysis. The county’s unemployment rate, at 3.3%, was below the national average, while its share of homes underwater was 1.3%. Still, homes here were relatively pricey: a buyer would need to spend about 44% of their income to afford a home in Chittenden, a greater share than the national average of about 32%, according to Attom.
Of the 50 least vulnerable markets, the four most populous included King County, Washington; Travis County, Texas; Salt Lake County, Utah, and Wake County, NC
Write to Shaina Mishkin at [email protected]