Housing

This Is the Most At-Risk Housing Market in America

Douglas A. McIntyre

Published: March 1, 2022 10:30 am

The housing market in America has not been this healthy in decades, if ever. The carefully followed S&P Case-Shiller housing price index showed that home prices increased almost 19% in December, which was close to a record in the history of the study. In some cities, that figure was closer to 30%.

Several factors have driven home prices. One is extremely low mortgage rates, which sit near 3% for a 30-year fixed home loan. Another is that middle-class and upper-class incomes were not hurt much by the pandemic. Yet another is the new mobility of Americans, who want to move from expensive coastal cities to others with lower costs of living and a better quality of life. This, in turn, has been helped by the fact millions of people will not return to traditional offices.

Not all markets have seen large increases in home prices. Despite a strong real estate market, there are still many counties where the housing market is at increased risk from the impact of the pandemic, directly or indirectly.

These areas have higher than average foreclosure rates and higher than average shares of homes with underwater mortgages, meaning the value of outstanding loans exceeds the total value of the property. Some of these markets are also far less affordable than average with high homeownership costs relative to local incomes.

Based on an index of these three measures (foreclosure rates, share of underwater mortgages and affordability) at the county level, 24/7 Wall St. identified the most at-risk housing market. All data was compiled in the first-quarter 2021 Special Coronavirus Report from ATTOM Data Solutions, a real estate and property data company.

Many of the counties we considered are located in the eastern United States, spanning Florida up through the mid-Atlantic and New England. The pandemic has taken a greater than average economic and public health toll in some of these counties.

To determine the most susceptible housing market, 24/7 Wall St. reviewed data from the ATTOM Data Solutions report on the susceptibility of county-level housing markets to risks arising from the coronavirus pandemic. Counties were ranked based on an index that consists of the percentage of residential properties with a foreclosure filing during the first quarter of 2021, the percentage of average local wages needed to afford the major expenses of owning a median-priced home in the first quarter of 2021, and the percentage of properties with outstanding mortgage balances that exceeded their estimated market values in the fourth quarter of 2020. All index components came from ATTOM Data Solutions and were weighted equally. Supplemental data on unemployment and labor force came from the Bureau of Labor Statistics and are not seasonally adjusted.

The most at-risk housing market in America is Sussex County, New Jersey. Here are the details:

• Location: New York-Newark-Jersey City, NY-NJ-PA metropolitan area
• Median home sale price: $293,545 (+30.5% one-year increase)
• Typical homeownership costs as share of median income: 40.6%
• Homes with underwater mortgages: 7,646 (18.3% of homes with loans)
• Homes with foreclosure filings: 45

Click here to all the most at-risk housing markets in America.