Photo by Tierra Mallorca at unsplash.com

ATTOM Data Solutions released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are vulnerable to downturn. 

This study was based on home affordability, underwater mortgages and other measures in the first quarter 2024. The report shows that California, New Jersey, and Illinois once again had the highest concentrations of the most at-risk markets in the country. Some of the biggest clusters were in the New York City and Chicago areas and inland California. Less vulnerable markets remained spread mainly throughout the South and Midwest.

The 50 counties on the list included six in and around Chicago, five in the New York City metropolitan area, and 14 in regions of California, predominantly in the Valley. 

The 14 in California included five counties in the northern part of the state, and Fresno County, Kern County, Kings County, Madera County, Merced County, San Joaquin County, Stanislas County and Tulare County in central California. 

“While we still have a housing crisis at the local level due to the lack of ability to build the additional housing inventory needed in order to keep up with the demand of those who wish to purchase a home and pursue the American dream of home ownership, the Fresno Association of Realtors remains optimistic about the outlook, health and opportunities of the current housing market for the following reasons and factors in spite of challenges such as affordability, high insurance costs, stagnant interest rates, and again, low inventory. Foreclosure rates remain low and homeowners are experiencing high levels of equity in their homes,” said FAR president Gary Carter. 

Carter shared the Months Supply of Inventory is a key indicator of the balance between supply and demand in the market. With a low value of 1.73, it indicates that there is a limited supply of homes available for sale, which typically leads to increased competition among buyers. 

The 12-Month Change in Months of Inventory shows a significant increase of 22.7% suggests that the market is experiencing a shift towards more inventory becoming available. Carter said this may be attributed to sellers taking advantage of the strong market conditions to list their homes for sale.

The Median Days Homes are On the Market being only 14 days reflects the high demand for homes in the market. Homes are selling quickly, indicating a competitive market where buyers need to act fast to secure a property.

“The patterns of varying market vulnerability that we’ve been seeing over the past few years are pretty much continuing in place, with some of the same areas falling out at opposite ends of the trend line,” said Rob Barber, CEO at ATTOM, in a news release. “Once again, this is not to suggest that any one market is facing imminent decline. It’s more of a measure of vulnerability gaps. But with the housing market slowing down over the past year, some metro areas appear notably better positioned than others to withstand a scenario of the market topping out and heading downward.”

Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for significant homeownership expenses on median-priced single-family homes, and regional unemployment rates. 

The conclusions were drawn from an analysis of the most recent home affordability, equity, and foreclosure reports prepared by ATTOM. Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 590 counties around the United States, with sufficient data to analyze in the first quarter of 2024.

The March 2024 unemployment rate was at least 5 percent in 30 of the 50 most at-risk counties, while the nationwide figure stood at 3.8%. The highest rates in the top 50 counties were all in central California: Tulare County, 12%; Merced County 11.6%; Kern County 10.2%; Kings County 10.1% and Fresno County 9.2%.

Significant homeownership costs on median-priced single-family homes and condos consumed more than one-third of average local wages in 36 of the 50 counties considered most vulnerable to market drop-offs in the first quarter of 2024. 

Nationwide, significant expenses on typical homes sold in the first quarter required 32.3 percent of average local wages.

The List to Sold Price Percentage of 99.8% demonstrates that sellers are successfully pricing their homes in line with market value, resulting in homes selling close to their list price. The Median Sold Price of $400,000 gives buyers and sellers a benchmark for the average price of homes sold in the market. 

“Overall, the combination of these metrics paints a picture of a competitive real estate market with limited inventory, quick sales, and strong pricing trends,” said Carter.