The Place Where Home Prices Are Most Likely to Decline

By Douglas A. McIntyre Published Sep 28, 8:30AM EDT

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The Place Where Home Prices Are Most Likely to Decline — © texpan / iStock via Getty Images

After months of acceleration in home price increases, the market has started to slow. In some places, it has slowed considerably. There are a few places in America where the problem has become severe. The trouble is most acute in areas around New York City and Chicago.
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The slowdown of home price increases recently was pointed out in the widely regarded S&P Case-Shiller home price index. After months in which the national index rose between 18% and 20% year over year, that slowed to 15.8% in July. Craig J. Lazzara, managing director at S&P DJI, said, “Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration.”
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While few people are deeply worried about the value of their homes, the primary drivers of home price increases have weakened. Mortgage rates a year ago were about 3% for a 30-year fixed rate. That number has jumped to 6%. Simply stated, that makes buying a home much more expensive. A recent study showed that 60% of home price gains over the past two years were due to the fact people could work from home. The COVID-19 pandemic had one positive side effect.
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ATTOM, the real estate data company, recently released its Special Housing Risk Report. It was created from data collected from the second quarter. Among the factors considered were home affordability, unemployment, underwater mortgages and foreclosures. A total of 575 counties were included. Among the counties in the most trouble were those where residents had to put substantial amounts of their income toward housing.
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Among the 50 counties most vulnerable to a drop in home prices, Passaic County, N.J., tops the list. It is across the Hudson River, which creates the border of the west side of New York City. Next on the list was Kent County, Delaware, followed by Essex County, N.J., which is also just west of New York City.

The signs continue to grow that the real estate market is in trouble. The ATTOM data is just one more confirmation.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.