These housing markets are the most vulnerable to recession

New Jersey, Illinois, and inside California have the highest concentrations of housing markets The most vulnerable are under the economic downturn due to rising unemployment and lower affordability, according to a recent report from real estate data firm ATTOM.

Markets in the New York City and Chicago areas in particular were most at risk, according to ATTOM’s Housing risk report.

The report highlights the relative vulnerability of counties across the country in the event of an economic downturn.

Rick Sharga, executive vice president of market intelligence at ATTOM, told FOX Business that this does not indicate that “relatively high-risk markets are at risk of some kind of impending catastrophe in the housing market.”

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New York City real estate sign

A real estate sign in Manhattan in August 2022. (Daniela Genovese/Fox Business)

However, the housing market has cooled so quickly in recent months that some economists from the National Association of Realtors believe that the industry fell into stagnation.

Homebuilders’ sentiment around the industry slumped to a two-year low, buyers pulled back from the market as they canceled home sales at the fastest pace since 2020 and builders rethought construction.

“We are seeing a slump in the housing sector in terms of lower home sales and home construction,” Lawrence Yun, chief economist at the National Association of Realtors, said recently.

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The ATTOM report, based on gaps in the affordability of homes, underwater mortgages, foreclosures, and unemployment during the second quarter, that 33 of the 50 counties most vulnerable to potential declines were in New Jersey, Illinois and California.

Nine of the 50 largest markets at risk were around the New York City area, including Kings and Richmond counties, which cover Brooklyn and Staten Island. Six of them were in the Chicago metropolitan area, including Cook, Keene, Kendall and McEnery counties, according to the data.

For sale mortgage

A “For Sale” sign hangs in front of a house on June 21, 2022, in Miami, Florida. (Joe Riddell/Getty Images/Getty Images)

thirteen of Markets most at risk It spread across northern, central and southern California. This includes Butte, Humboldt, Shasta, and Solano counties in the northern part of the state as well as Fresno, Kings, and Madeira counties in central California. In addition, Kern, Riverside and San Bernardino counties in the southern part of the state were also among California’s markets most at risk.


“The most vulnerable markets share two fairly consistent traits: unemployment that has been above the national average and very poor affordability,” Sharga said.

In determining affordability, the company considered the amount of median household income needed to purchase a mid-market home. The national average is 31.5%. But the data showed that in many of the riskiest markets, it was above 50%.


A sign “For Sale” in Crockett, California, June 14, 2022. (David Paul Morris/Bloomberg via Getty Images/Getty Images)

“High debt-to-income mortgages have long been considered risky, as these borrowers have a hard time dealing with other expenses or creating cash reserves that they can use in an emergency,” Sharga added.

What was not surprising, according to Sharga, was that a lot of the more risky markets were in some of the country’s most expensive metro areas, such as New York City And Chicago, where affordability is the weakest.

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By comparison, the south and The Midwest had the highest concentration One of the markets considered least vulnerable during a downturn. Counties in this part of the country have more affordable homes and lower levels of underwater mortgages, foreclosure activity, and unemployment.

According to the data, 25 of the 50 counties were at least at risk in the South, and another 14 in the Midwest.

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