Housing Risk Is Most Concentrated in These Three States

Nearly half of the 51 counties in the U.S. that are considered most exposed to housing risk are in three states: California, New Jersey and Illinois. These counties tend to have a higher percentage of homes facing possible foreclosure, mortgage balances greater than the value of the property, lower average annual wages, and higher local unemployment rates.

These are the findings of a new Special Housing Risk report released by ATTOM based on an analysis of 589 counties in 2Q 2024. The housing market continues to gain momentum, the report notes, but some markets show signs of potential instability. “While these observations don’t indicate immediate red flags or warning signs of an impending downturn, they do highlight areas of relative risk. With the housing market still facing challenges, it’s crucial to closely monitor regions where key indicators suggest a higher likelihood of issues,” said Rob Barber, CEO of ATTOM.

These indicators point to seven counties in and around New York City, five in the Chicago metropolitan area, and 12 in California as at high risk. The remaining 26 counties are sprinkled around the South, the Midwest and the Northeast. Those with the least risk are concentrated in the Washington, DC, Richmond and Nashville metros.

The report concluded that the biggest costs of homeownership – mortgage payments, property taxes and insurance –on median-priced single-family homes were “seriously unaffordable” in 33 of the counties most vulnerable to market slides at the end of the second quarter. In these cases, such expenses consumed at least 43% of average local wages, compared to the national average of 35.1%. In the worst cases, the bite homeownership expenses took out of household wages was much greater: 111.8% in Kings County, NY (Brooklyn), 74.4% in Riverside County, CA, and 70.4% in Washington County, UT (St. George).

While the 5% average share of underwater mortgages in the high-risk counties was comparable to the national average of 5.1%, that level paled in comparison to the levels in the most at-risk counties. In Tangipahoa Parish, east of Baton Rouge, LA, 26% of mortgages were underwater, in Peoria County, IL 16.3%, Lake County, IN (Gary), 13.2%, in Orleans Parish, LA (New Orleans) 13.1%, and in Montgomery County, OH (Dayton) 10.9%.

Homes in the most vulnerable areas were also more exposed to foreclosures in the second quarter. In these 39 counties, one in every 1,000 residential properties faced foreclosure, compared to one in every 1,575 nationally.

At the other end, 23 of the 51 counties in the best shape were in the South, 15 in the Midwest, 11 in the Northeast, and two in the West. Virginia and Wisconsin were each home to eight of these counties, five were in Tennessee (the Nashville and Knoxville areas).