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California, New Jersey, and Illinois Top List of Markets Most Vulnerable to a Downturn

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Housing Markets

California, New Jersey, and Illinois Top List of Markets Most Vulnerable to a Downturn

Several regional markets in California, New Jersey, and Illinois are at risk of a downturn as the housing market cools off from a mid-pandemic buying frenzy 

September 16, 2022
Chicago city skyline and suburban sprawl seen from above
Image: Stock.adobe.com

A recently released Special Housing Report from real estate data firm ATTOM reveals that New Jersey, Illinois, and inland California continued to have the highest concentrations of the most-at-risk markets in the second quarter of 2022. Of the 50 counties most vulnerable to potential declines, nine were located in and around New York City, six were in the Chicago metropolitan area, and 13 were spread through northern, central, and southern California, ATTOM reports.

The at-risk markets highlighted in the report were nearing a tipping point in measures of home affordability, underwater mortgages, foreclosures, and unemployment. As the market cools, these vulnerable locations could be some of the first to see significant downturns amid slower sales.

Major home ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes consumed more than one-third of average local wages in 35 of the 50 counties that were most vulnerable to market problems in the second quarter of 2022.

At least 7 percent of residential mortgages were underwater in the second quarter of 2022 in 23 of the 50 most at-risk counties. Nationwide, 5.9 percent of mortgages fell into that category.

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