Housing Markets at Risk from Pandemic Downturns Concentrated in New Jersey, Illinois and California

Chicago and New York City Areas Still Most At-Risk from Damage Connected to Coronavirus Pandemic in Fourth Quarter of 2021; Other Vulnerable Markets Again Mainly Along East Coast; West Region Outside Pockets of California Remain Least Exposed

IRVINE, Calif. - Jan. 20, 2022 -- ATTOM, curator of the nation's premier property database, today released its fourth-quarter 2021 Special Coronavirus Report spotlighting county-level housing markets around the United States that are more or less vulnerable to damage from the ongoing Coronavirus pandemic still endangering the U.S. 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, PA, 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.

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. See below for the full methodology.

Disparities in pandemic-related risks to housing markets across the country remained in place during the fourth-quarter of last year 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 a third wave surges across the U.S.

With that danger still looming, the risk of a downturn remained higher in the fourth quarter of 2021 in counties with some combination of three warning signs: housing that is unaffordable for average workers, higher levels of foreclosures and larger portions of homeowners who are underwater on their mortgages.

"The U.S. housing market keeps powering on despite of the Coronavirus pandemic that's still raging across the country. Indeed, home prices keep rising in part because of the crisis," said Todd Teta, chief product officer with ATTOM. "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."

Most-vulnerable counties clustered in the Chicago, New York City and Philadelphia areas, as well as Delaware and parts of California

Twenty-eight of the 50 U.S. counties most vulnerable in the fourth quarter of 2021 to housing market troubles connected to the pandemic (from among 575 counties with enough data to be included in the report) were in the New York, NY, Chicago, IL, and Philadelphia, PA, metropolitan areas, as well as in Delaware and California.

They included eight in Chicago and its suburbs (Cook, De Kalb, Du Page, Kane, Kendall, Lake, McHenry and Will counties) and eight in the New York City metropolitan area (Bergen, Essex, Hunterdon, Middlesex, Ocean, Passaic and Sussex counties in New Jersey and Rockland County in New York). The three in the Philadelphia, PA, area were Burlington, Camden and Gloucester counties in New Jersey. Kent County (Dover), DE, and Sussex County (Georgetown), DE, also were among the top 50 most at-risk in the fourth quarter.

In other states, California had seven counties in the top 50 list: Butte County (Chico), El Dorado County (east of Sacramento), Humboldt County (Eureka) and Shasta County (Redding) in the northern part of the state; as well as Kern County (Bakersfield), Madera County (outside Fresno) and Riverside County (east of Los Angeles) in the central and southern sections of the state.

Florida had also three among the top 50. They were Bay County (Panama City), Flagler County (Palm Coast) and Lake County (outside Orlando).

Counties most at-risk have higher levels of unaffordable housing, underwater mortgages and foreclosures

Major home ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes consumed more than 30 percent of average local wages in 32 of the 50 counties that were most vulnerable to market problems connected to the virus pandemic in the fourth quarter of 2021. The highest percentages in those markets were in Rockland County, NY (outside New York City) (57.9 percent of average local wages needed for major ownership costs); El Dorado County, CA (east of Sacramento) (52.5 percent); Riverside County, CA (east of Los Angeles (52 percent); Bergen County, NJ (outside New York City) (47.6 percent) and Passaic County, NJ (outside New York City) (44.7 percent). Nationwide, major expenses on typical homes sold in the fourth quarter required 25.2 percent of average wages.

At least 10 percent of residential mortgages were underwater in the third quarter of 2021 (the latest data available on owners owing more than their properties are worth) in 18 of the 50 most at-risk counties. Nationwide, 7.1 percent of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Kennebec County (Augusta), ME (29.6 percent of mortgages underwater); Webb County (Laredo), TX (23.3 percent); Kankakee County, IL (outside Chicago) (19 percent); Saint Clair County, IL (outside St. Louis, MO) (18.3 percent) and Cumberland County (Fayetteville), NC (18.1 percent).

More than one in 1,500 residential properties faced a foreclosure action in the fourth quarter of 2021 in 36 of the 50 most at-risk counties. Nationwide, one in 2,446 homes were in that position. (Foreclosure actions have risen over the past few months since the end of a federal moratorium on lenders taking back properties from homeowners who fell behind on their mortgages during the virus pandemic. The moratorium ended July 31 and foreclosures are expected to spike over the coming year.) The highest rates in the top 50 counties were in Saint Clair County, IL (outside St. Louis, MO) (one in 121 residential properties facing possible foreclosure); Camden County, NJ (outside Philadelphia, PA) (one in 606); Sussex County, NJ (outside New York City) (one in 709); Cumberland County, NJ (outside Philadelphia, PA) (one in 743) and Cook County (Chicago), IL (one in 757).

Counties least at-risk spread throughout South, Midwest and West

Forty-two of the 50 counties least vulnerable to pandemic-related problems from among the 575 included in the fourth-quarter report were in the South, Midwest and West. Just eight were in the Northeast.

Oregon had eight of the 50 least at-risk counties, including three in the Portland metropolitan area (Multnomah, Washington and Yamhill counties), while Washington had four, including King County (Seattle) and Spokane County. Colorado had three, including two in the Denver metropolitan areas (Denver and Arapahoe counties). Also on the list of least-vulnerable counties were Blount and Knox counties in the Knoxville, TN, metro area; Erie and Niagara counties in the Buffalo, NY, metro area and Kent and Ottawa counties in the Grand Rapids, MI, area.

Others among the top-50 least at-risk counties that had a population of 500,000 or more included Maricopa County (Phoenix), AZ; Hennepin County (Minneapolis), MN); Travis County (Austin), TX; Mecklenburg County (Charlotte), NC, and Suffolk County (Boston), MA.

Lower levels of unaffordable housing, underwater mortgages and foreclosure activity in least-vulnerable counties

Major home ownership costs (mortgage, property taxes and insurance) on median-priced single-family homes consumed less than 30 percent of average local wages in 35 of the 50 counties that were least at-risk from market problems connected to the virus pandemic in the fourth quarter of 2021. The lowest percentages among those counties were in Kenton County, KY (outside Cincinnati, OH) (16.1 percent of average local wages needed for major ownership costs); Washington County, PA (outside Pittsburgh) (16.6 percent); Saint Louis County (Duluth), MN (16.7 percent); Richmond City/County, VA (17.5 percent) and Madison County (Huntsville), AL (18 percent).

More than 10 percent of residential mortgages were underwater in the third quarter of 2021 (with owners owing more than their properties are worth) in only one of the 50 least at-risk counties. Those with the lowest rates among those counties were Deschutes County, (Bend) OR (2 percent of mortgages underwater); Chittenden County (Burlington), VT (2 percent); Travis County (Austin), TX (2.2 percent); Maricopa County (Phoenix), AZ (2.4 percent) and Lane County (Eugene), OR (2.5 percent).

More than one in 1,500 residential properties faced a foreclosure action during the fourth quarter of 2021 in none of the 50 least at-risk counties. Those with the lowest rates in those counties were Chittenden County (Burlington), VT (one in 69,734 residential properties facing possible foreclosure); Yamhill County, OR (outside Portland) (one in 39,069); Lane County (Eugene), OR (one in 32,522); Marion County (Salem), OR (one in 31,553) and Deschutes County (Bend), OR (one in 29,571).

Report methodology

The ATTOM Special Coronavirus Market Impact Report is based on ATTOM's fourth-quarter 2021 residential foreclosure and home affordability reports and third-quarter 2021 underwater property report. (Press releases for those reports show the methodology for each.) Counties with sufficient data to analyze were ranked based on the percentage of residential properties with a foreclosure filing during the fourth quarter of 2021, the percentage of average local wages needed to afford the major expenses of owning a median-priced home in the fourth quarter of 2021 and the percentage of properties with outstanding mortgage balances that exceeded their estimated market values in the third quarter of 2021. Ranks then were added up to develop a composite ranking across all three categories. Equal weight was given to each category. Counties with the lowest composite rank were considered most vulnerable to housing market problems. Those with the highest composite rank were considered least vulnerable.

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