These Housing Markets Face COVID-Driven Risks

Chicago and New York City areas remain most at-risk from damage connected to the Coronavirus pandemic in Q4 2021, according to a report by property database curator ATTOM.

Its 2021 Special Coronavirus Report spotlights county-level housing markets around the US that are more or less vulnerable to damage from the ongoing Coronavirus pandemic still endangering the US economy. 

The report shows that New Jersey, Illinois and parts of California had the highest concentrations of the most at-risk markets in the fourth quarter—with the biggest clusters still in the New York City and Chicago areas. The West, meanwhile, remained far less exposed outside of California.

The fourth-quarter trends, which generally continued patterns from throughout the past year, revealed that New Jersey, Illinois and California had 31 of the 50 counties most vulnerable to the potential economic impact of the pandemic. 

The 50 most at-risk included eight counties in the Chicago metropolitan area, eight near New York City and seven sprinkled through northern, central and southern California.

Elsewhere, the rest of the top 50 counties were scattered mainly along the East Coast, including two of Delaware’s three counties and three counties in the Philadelphia metropolitan area.

Outside of California, no other western counties made it into the top 50 during the fourth quarter of last year. On the contrary, the West region again had the highest concentration of markets considered least vulnerable to pandemic-related damage.

Foreclosure Data Drives Market Risk

Markets 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 and the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes. 

The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. 

Rankings were based on a combination of those three categories in 575 counties around the United States with sufficient data to analyze in the third and fourth quarters of 2021. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the three ranks. 

Home Prices Climbed More Than 10% 

“The US housing market keeps powering on despite the Coronavirus pandemic that’s still raging across the country. Indeed, home prices keep rising in part because of the crisis,” Todd Teta, chief product officer with ATTOM, said in prepared remarks.

“Nevertheless, the virus remains a potent threat to the broader economy and the housing market, with some of the same counties we’ve seen in the past continuing to look vulnerable to potential downturns. No immediate warning signs hang over any one part of the country, but pockets are more vulnerable to the market taking a turn for the worse.”

Disparities in pandemic-related risks to housing markets across the country remained in place during the fourth-quarter of 2021 even as a decade-long boom in the broader U.S. market continued roaring ahead.

Prices climbed more than 10 percent in most of the nation last year, both because of and in spite of the ongoing pandemic that slowed or idled major sectors of the economy in 2020. Throughout the past year, a surge of buyers has flooded the housing market amid a combination of historically low home-mortgage rates and a desire by many to trade congested virus-prone areas for the perceived safety and larger space offered by a house or condominium. As they have chased a tight supply of homes choked further by the pandemic, prices have soared.

Despite the continued price runups, a few signs of a possible market slowdown have emerged recently in the form of declining home affordability, slumping investor profits and rising inflation. The pandemic also remains a threat to the market as the Omicron wave surges across the United States.