Coastal Crunch: New Report Reveals Housing Downturn Risk in Major Metros
Coastal Crunch: New Report Reveals Housing Downturn Risk in Major Metros
A new housing report from ATTOM is sounding the alarm for several key U.S. markets, particularly those along the coasts. The analysis reveals that housing markets in California, New Jersey, Illinois, and Florida are significantly more susceptible to a downturn, with regions near major metropolitan hubs like Chicago, New York City, and California’s Inland Empire topping the list of vulnerable areas.
According to ATTOM’s comprehensive study, these four states alone account for a staggering two-thirds of the 50 U.S. counties identified as most at-risk. The report points to a confluence of factors creating this heightened vulnerability: widening affordability gaps, a surge in foreclosure filings, and rising unemployment rates are all placing immense pressure on local housing markets and pushing homeownership further out of reach for many.
The study, which meticulously ranked 578 counties based on four critical indicators—affordability, the percentage of underwater mortgages, foreclosure rates, and local unemployment—found distinct clusters of high-risk areas. Illinois, for instance, has six of the riskiest counties, including Cook, Kane, and Will Counties surrounding Chicago. New Jersey similarly faces challenges with five counties, predominantly in the New York City suburbs. California’s vulnerable spots are widespread, from the Central Valley (Kern, Merced) to Southern California (San Bernardino, Riverside). Florida, notably, has reappeared on the high-risk list after a period of lower prominence.
Affordability remains a dominant concern. The report highlights that in 30 of the 50 most precarious counties, major homeownership costs consume more than 43% of local wages, significantly surpassing the national average of 34%. Kings County (Brooklyn), New York, presents an extreme example, where ownership expenses demand an astounding 108% of local wages, making it virtually unsustainable for average earners.
Foreclosures are also a critical driver of risk. Thirty-five of the most exposed counties are experiencing at least one in 1,000 homes entering foreclosure, a rate considerably higher than the national average of one in 1,618. Furthermore, unemployment rates in these vulnerable markets consistently hover above the national average of 4.2%.
Mortgage distress adds another layer of concern. Twenty-three of the 50 highest-risk counties reported at least 6% of homes being “underwater,” meaning mortgage balances exceed property values. St. Clair County, Illinois, recorded the highest share of underwater mortgages at a substantial 15%.
In contrast to the coastal crunch, the South continues to demonstrate remarkable stability. Nearly half (22 out of 50) of the least vulnerable counties are found in southern states like Tennessee, Virginia, and Alabama. These regions benefit from stronger affordability and lower foreclosure activity, offering a stark contrast to the escalating risks elsewhere.
ATTOM’s report underscores the uneven distribution of housing market risk across the U.S., even after a prolonged 13-year housing boom. While coastal states grapple with escalating homeownership costs, higher foreclosure rates, and significant mortgage distress, southern markets appear to be maintaining a comparatively lower risk profile, signaling a potential shift in where the smart money might be flowing.
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