California, New Jersey and Illinois Have the Most At-Risk Housing Markets in the Country


Recent housing reports suggest that inventory is increasing and, as a result, home prices are starting to drop in certain areas, resulting in improved affordability.

But which areas are most at risk of seeing their housing markets go into a downturn as a result of shifting market conditions?

A report from ATTOM reveals that California, New Jersey and Illinois have the highest concentrations of at-risk markets in the country.

Some of the biggest clusters of at-risk markets are also in the New York City and Chicago areas, as well as inland California.

Less-vulnerable markets remained spread mainly throughout the South and Midwest.

The first-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 34 of the 50 counties around the U.S. considered most exposed to potential drop-offs.

As with earlier periods over the past few years, those concentrations dominated the list of metropolitan areas more at 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 areas of California mostly away from the Pacific coast. The rest were scattered around other parts of the country.

At the other end of the risk spectrum, 22 of the 50 markets considered least likely to decline in home values were in in Virginia, Wisconsin and Tennessee. They included four each in the Washington, D.C., 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,” says Rob Barber, CEO at ATTOM, in a statement. “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.”

Photo: Breno Assis

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