These are the most and least vulnerable housing markets if the US heads into a recession

These are the most and least vulnerable housing markets if the US heads into a recession


If a major recession hits the US economy, homes in New York City, Chicago and Philadelphia counties are the most vulnerable to declines, according to a new report.

According to Attom Data Solutions, a real estate data company, housing markets near or in these large cities are at higher risk of being affected by a downturn in the housing market.

Counties were judged to be at risk based on a number of factors, including whether there was a high percentage of homes in foreclosure, a large proportion of underwater mortgages, as well as the county’s relative wages and unemployment rates.

Nearly 600 counties in the US were classified under these categories. The data used was from the second quarter of 2022.

“The Federal Reserve has promised to be as aggressive as it needs to be in controlling inflation, even if its actions lead to a recession,” said Rick Sharga, executive vice president of market intelligence at ATTOM.

“Given how little progress has been made in reducing inflation so far, the Fed’s actions look increasingly likely to tip the economy into recession, and some housing markets will be more vulnerable than others if that happens. ”.

Attom found that nine counties in and around New York City were the most vulnerable. Kings and Richmond counties were the most vulnerable, meaning Brooklyn and Staten Island.

In New Jersey and New York in general, the counties most at risk include Bergen, Essex, Ocean, Passaic, Sussex, and Union.

Six counties in Chicago were at higher risk and three in Philadelphia.

Part of the reason these local markets are more at risk is because households in these areas bear a greater financial burden relative to their wages.

Mortgage payments, property taxes and insurance for median-priced single-family homes ate up a substantial portion of wages, Attom said.

For example, in Brooklyn, nearly 103% of local median wages were needed to cover the costs associated with home ownership.

Some counties are showing signs of distress, Attom said.

Rockland County, New York, had the highest share of underwater mortgages, at 19.2%, in the first quarter of 2022.

Lake County, Indiana, which is outside of Chicago, had 19.2% of mortgages underwater, followed by Peoria County, Il., with 17.6% of mortgages.

Home ownership can be an expensive undertaking.

It’s not just the monthly mortgage payments, the homeowner also has to pay for home insurance and property taxes, as well as unexpected costs that come up, from repairs to furniture.

Two-thirds of new homeowners said they felt “home rich and cash poor” because of unexpected costs, according to a recent US News and World Report survey.

US News surveyed 2,000 American homeowners who bought their first home last year or this year.

More than half of homeowners surveyed (56%) said they had to deal with unexpected repairs costing between $500 and $1,000.

The skyline of downtown Nashville, Tennessee.

Getty Images/iStockphoto

On the other hand, there are local markets where households are not so vulnerable.

Counties in the South and Midwest were less vulnerable to shrinking housing markets.

Of the 50 counties least at risk of housing decline, six were in Tennessee, five in Wisconsin and four in Arkansas.

Six of the top 50 counties with the lowest risk of decline during a recession include Davidson, Rutherford and Williamson counties in Nashville, Tennessee.

In Wisconsin, that meant Brown County (Green Bay), Dane County (Madison), Eau Claire County, La Crosse County, and Winnebago County (Oshkosh).

Home ownership was much less expensive in these parts. In Sebastian County, Arkansas, for example, only 16.5% of local median wages were required to cover major property costs.

“The ongoing wide disparities in risks across the country come at a time when the US housing market is facing headwinds that threaten to slow or end an 11-year rise in home prices. homes,” Attom said.

While falling home sales and higher rates have slowed the market, this report doesn’t suggest an imminent drop in prices, Attom said.

Still, with affordability worsening and foreclosures and delinquencies rising, they added, “local markets [are] heading into that uncertain future facing significant differences in risk measures.”

Do you have any idea about the housing market? Email MarketWatch Reporter Aarthi Swaminathan at


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