Where Are Real Estate's Healthiest Housing Markets? (Q1 2024)

Housing Risk Report Highlights Vulnerable U.S. Markets

ATTOM, a leading curator of land, property, and real estate data, has released its Special Housing Risk Report for the first quarter of 2024. This report spotlights county-level housing markets across the United States that are more or less vulnerable to declines based on factors such as home affordability, underwater mortgages, and other critical measures. The findings reveal that California, New Jersey, and Illinois continue to have the highest concentrations of at-risk markets, with significant clusters in the New York City and Chicago areas, as well as inland California. Conversely, less vulnerable markets are primarily located in the South and Midwest.

High-Risk Markets in California, New Jersey, and Illinois

The first-quarter patterns, derived from gaps in home affordability, underwater mortgages, foreclosures, and unemployment, showed that California, New Jersey, and Illinois had 34 of the 50 counties considered most exposed to potential drop-offs. This trend has persisted over the past few years, with these states consistently dominating the list of metropolitan areas at higher risk of downturns.

The 50 counties on the list included six in and around Chicago, five in the New York City metropolitan area, and 14 in various parts of California, primarily away from the Pacific coast. The remaining counties were scattered across other regions of the country.

Less-Vulnerable Markets Predominantly in the South and Midwest

At the opposite end of the risk spectrum, 22 of the 50 least vulnerable markets were located in Virginia, Wisconsin, and Tennessee. These included four each in the Washington, DC, and Richmond, VA, metro areas.

“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. “Once again, this is not to suggest that any one market is facing imminent decline. It’s more 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.”

Key Factors Affecting Market Vulnerability

Counties were assessed based on several factors: the percentage of homes facing possible foreclosure, the portion with mortgage balances exceeding estimated property values, the percentage of average local wages required to cover major homeownership expenses on median-priced single-family homes, and local unemployment rates. These conclusions were drawn from the most recent home affordability, equity, and foreclosure reports prepared by ATTOM, alongside federal unemployment data.

Most Vulnerable Markets: Chicago, New York City, and Inland California

The metropolitan areas around Chicago, IL, and New York, NY, along with extensive regions of northern and central California, had 25 of the 50 U.S. counties most vulnerable to housing market troubles in the first quarter of 2024. These included notable counties such as:

  • Illinois and Indiana: De Kalb, Kane, Kendall, McHenry, and Will counties in Illinois and Lake County in Indiana.

  • New York and New Jersey: Kings County (Brooklyn), NY, and Essex, Passaic, Sussex, and Union counties in New Jersey.

  • California: Butte, El Dorado, Humboldt, Solano, and Yolo counties in northern California; Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare counties in central California; and San Bernardino County in southern California.

Less Vulnerable Counties with Better Market Measures

In contrast, 24 of the 50 least vulnerable counties were in the South and 19 in the Midwest. Notable low-risk counties included:

  • Virginia: Alexandria City, Arlington, Fairfax, and Loudoun counties (Washington, DC area); Chesterfield, Hanover, Henrico, and Richmond City counties (Richmond, VA area); Albemarle County (Charlottesville).

  • Wisconsin: Brown (Green Bay), Outagamie (outside Green Bay), Dane (Madison), Rock (outside Madison), Eau Claire, La Crosse, and Winnebago (Oshkosh) counties.

  • Tennessee: Davidson, Rutherford, Williamson (Nashville metro area), Blount, Knox (Knoxville area), and Sullivan (Kingsport) counties.

Wrapping Up

ATTOM's Special Housing Risk Report underscores the ongoing disparities in housing market vulnerability across the United States. While areas in California, New Jersey, and Illinois remain highly exposed to potential market declines, regions in the South and Midwest generally show more resilience. These insights are crucial for homeowners, potential buyers, and policymakers as they navigate the complex housing landscape.

(Source: attomdata.com)

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