#United States #Housing Market #Real Estate #ATTOM #California, Florida, Illinois, New York City

Rising Housing Market Risks in Major U.S. Cities

Recent analysis from ATTOM, a prominent provider of property data and analytics, highlights growing concerns around the potential decline of housing markets in key regions across the United States. The Special Housing Risk Report indicates that California, Illinois, Florida, and the New York City area rank highest in terms of vulnerability to economic downturns related to real estate. This trend appears to be driven by a combination of factors, including affordability challenges, rising foreclosure rates, and increasing instances of underwater mortgages.

As of the fourth quarter of 2024, the report identifies two-thirds of the 50 counties deemed most at risk located predominantly in the aforementioned states. Areas such as New York City and Chicago are particularly stand out, alongside several inland regions of California, which collectively host a significant number of at-risk housing markets. In contrast, other parts of the Midwest, Northeast, and South show a lower vulnerability to market fluctuations.

A Closer Look at the Data

The report's findings arise from comprehensive data analysis on affordability, mortgage equity, foreclosure statistics, and unemployment. The ATTOM report highlights that for many individuals, homeownership costs have drastically outpaced income growth, with many households spending over 43% of their income on ownership-related expenses in the most vulnerable counties. For instance, residents in places like Kings County (Brooklyn), NY need a staggering 106.5% of average wages just to cover essential homeownership costs.

ATTOM's report has pinpointed several counties facing the most severe risks:

• - Illinois: Cook, Kane, Kendall, McHenry, and Will counties
• - New York City: Kings County and Richmond County
• - Florida: Charlotte, Hernando, Lake, Marion, Pasco, Polk, and St. Lucie counties
• - California: Butte, Contra Costa, El Dorado, Humboldt, Shasta, Solano, Fresno, Kern, Kings, Madera, San Joaquin, Stanislaus, Riverside, and San Bernardino counties

Conversely, areas with lower risks tend to be located in regions such as Wisconsin, Virginia, Tennessee, and Pennsylvania, where indicators for home affordability, unemployment rates, and foreclosure rates appear markedly healthier.

Factors Influencing Vulnerability

According to Rob Barber, CEO of ATTOM, the fluctuations in local housing market conditions depend heavily on several key indicators which include:

• - Foreclosure rates: A concerning sign when a significant percentage of properties encounter foreclosure actions. For instance, Charlotte County, FL faced a daunting one-in-198 properties at risk of foreclosure.
• - Underwater mortgages: The report indicates that in nearly 29 out of the 50 most-at-risk counties, over 6% of residential mortgages were underwater, suggesting homeowners owe more than the home's current market value. Pasco County, FL stood out with an alarming rate of 15.8%.
• - Unemployment rates: As demonstrated with Kern County and Kings County, CA, where unemployment rates reached highs of 7.9%, exacerbating economic instability.

The Broader Market Context

As local markets face this continued strain, buyers nationwide are feeling the pressure of record-high home prices coupled with rising mortgage rates. Such factors are squeezing potential homeowners, contributing to an overall sense of uncertainty in the market. The low inventory of homes for sale further complicates the situation, leading to fierce competition and escalating prices in many regions.

Looking Ahead

These dynamics paint a complex picture of the current housing market landscape as it stands on the brink of the traditionally busy spring buying season. It remains crucial for stakeholders and potential homeowners to remain informed of these trends and their potential implications while ATTOM continues to monitor the evolving marketplace. The hope is that attention to these disparities can lead to better solutions and more balanced, sustainable growth across various housing markets.

As ATTOM continues to compile and analyze data, the responsibility lies with policymakers and industry stakeholders to work towards stabilizing these markets while providing necessary support to those affected by these profound economic challenges.