During the fourth quarter, California, Illinois and the New York City area had the highest concentrations of at-risk markets in the U.S., with parts of Florida also in the mix, according to a special report from ATTOM.
Less-vulnerable markets were clustered in various other areas of the Northeast, Midwest and South.
ATTOM uses data on affordability gaps, equity, underwater mortgages, foreclosures and unemployment as the main criteria for determining at-risk markets – which means these markets could see a slowdown in home sales and/or falling home prices in the months to come.
At the county level, five markets in and around Chicago; four markets in or near New York City; and seven scattered across Florida were identified as being the most at-risk during the fourth quarter. Another 14 at-risk markets were in California, mostly inland from the Pacific coast. The rest were spread across different stretches of the Midwest, Northeast and South.
The ongoing rise in home prices around much of the nation has outpaced most wage gains around the country to varying degrees, ATTOM says in the report. That has led to home ownership costs consuming more than triple the portion of average wages in some parts of the country compared to others. Similar disparities can be found in several other measures: unemployment rates, the level of homeowners facing foreclosure and the portion owing more on their mortgages than their homes are worth.
“Local housing markets fluctuate in and out of the lists of areas more or less exposed to declines from quarter to quarter, but some regions consistently rank among the most vulnerable due to significant gaps in key market indicators,” says Rob Barber, CEO at ATTOM. “This report isn’t meant to raise red flags or predict endless gains – it simply highlights counties experiencing more or less pressure that could influence home values, foreclosures, or homeowner equity.”
“As always, we will keep tracking these patterns as market conditions evolve,” Barber adds.
Home buyers continue to confront record-high home prices that remain widely unaffordable across the country, threatening the rise in values, ATTOM says.
A recent increase in home-mortgage rates puts further downward pressure on prices by making ownership costs even higher.
At the same time, though, a historically low supply of homes for sale along with elevated investment markets that give more resources to buyers remain formidable sources of energy for further price spikes. That is especially true as the market approaches its annual Spring buying season.
Read the report for more specifics about which markets are the most at-risk.
Photo: Richard Horne