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A report on county-level housing markets vulnerable to declines because of home affordability, underwater mortgages, and other measures, shows that California, New Jersey and Illinois once again have the highest concentrations of the most-at-risk markets. 

The Special Housing Risk Report released earlier this week by ATTOM, a curator of real estate data, showed that in the first quarter of 2024, the less vulnerable markets were spread mostly throughout the South and Midwest. 

The Q1 patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 34 of the 50 counties around the U.S. considered most exposed to potential drop-offs.  

At the other end of the risk spectrum, 22 of the 50 markets considered least likely to decline were in Virginia, Wisconsin, and Tennessee. 

“The patterns of varying market vulnerability that we’ve been seeing over the past few years are pretty much continuing in place, with some of the same areas falling out at opposite ends of the trend line,” said Rob Barber, CEO at ATTOM. 

“Once again, this is not to suggest that any one market is facing imminent decline. It’s more a measure of vulnerability gaps. But with the housing market slowing down over the past year, some metro areas appear notably better positioned than others to withstand a scenario of the market topping out and heading downward.” 

Counties were considered at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes, and local unemployment rates.  

Using these factors, 590 county-level housing markets were analyzed in the U.S. to determine the 50 counties most vulnerable to housing market troubles. Essex, Passaic, Sussex, and Union counties in North Jersey were included on the most at-risk list. 

For example, the major costs of homeownership – property tax, mortgage, and insurance – average 62.1% of local wages in Passaic County. Nationally, that figure is 32.3%. 

In the foreclosure category, several New Jersey counties were identified as having particularly high foreclosure rates: Cumberland County (1 in 488), Warren County (1 in 517) and Sussex County (1 in 567.) The national foreclosure rate is more than 1 in 1,478 homes.