Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Abstract graphic implying market prices zigzagging downward. (Image: Adobe Stock)

Portfolio > Economy & Markets

These Areas Are Most at Risk of a Housing Downturn

Your article was successfully shared with the contacts you provided.

Homes in and around New York City and Chicago are most vulnerable to price declines in a potential economic downturn, according to a report released Thursday by real estate data analytics firm Attom.

Of the 50 counties most at risk, nine are in and around New York City, six are in the Chicago metropolitan area, and 13 are spread through California.

These counties have high levels of unaffordable housing, underwater mortgages, foreclosures and unemployment. In contrast, counties least at risk — concentrated in the South and Midwest apart from Chicago — have lower such levels.

After a pandemic-related boom, the Federal Reserve’s aggressive tightening policy and elevated inflation are crimping the once-booming U.S. housing market.

Rising mortgage rates have helped to dampen sales and force an increase in income needed to cover a typical home payment.

“Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens,” said Rick Sharga, executive vice president of market intelligence at Attom.

Bloomberg chart showing Vulnerable Housing | Chicago and New York area markets most at risk to price declines

The most vulnerable New York City counties include Kings and Richmond counties, which cover Brooklyn and Staten Island, and seven counties in the suburbs: Bergen, Essex, Ocean, Passaic, Sussex, Union and Rockland. New York County, or Manhattan, ranks 52 out of the 575 analyzed. Passaic and Essex counties in New Jersey top the list respectively at first and second.

Seventh most at risk is Cook County, which holds Chicago and is the only one with a population of at least 1 million that ranks among the top 25.

Counties with a minimum population of 500,000 that were among the 50 safest include Washington’s King County, which encompasses Seattle; Texas’s Travis County that includes Austin; Utah’s Salt Lake County; Wake County in North Carolina, and Cobb County in Georgia, according to the report.

The report gauged risks that housing markets face based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average wages required to pay for major home ownership expenses on median-priced single-family homes, and unemployment rates as of the second quarter this year.

 (Image: Adobe Stock) 

Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.