Report Shows That California, New Jersey, and Illinois Counties Are Among the Most At-Risk Real Estate Markets in the Country.
Reports from ATTOM indicate that California, New Jersey, and Illinois counties are among the most at-risk real estate markets in the country. The rates of foreclosures, underwater mortgages, and unemployment were higher across all of these markets, while the real estate markets in the South and Midwest carried the least risk. The report comes amid analysts’ predictions of a decline in property prices by 1% or more in 2024, as mortgage rates are expected to drop to around 6.5%.
Expectations for Improvement in the Real Estate Market in 2024, but Several Local Markets Are at Risk
After a tough year marked by mortgage rates reaching their highest levels in over 20 years, experts anticipate a recovery in the real estate market in 2024. However, new reports warn that several markets are at risk of experiencing a decrease in home values. California, New Jersey, and Illinois are considered to be among the most at-risk real estate markets in the country, as foreclosures, affordability issues, and mortgage rates have made the counties in these states some of the most susceptible to declines in property values, according to an exclusive housing risk report from ATTOM Data Solutions.
Expectations for Improvement in the Real Estate Market in 2024, but Several Local Markets Are at Risk
The report, which relies on third-quarter data, comes at a time when real estate experts are predicting improvements in the real estate market next year. Mortgage rates, which peaked at 8% in 2023, are expected to average 6.8%, potentially dropping to 6.5% by the end of 2024, according to Realtor.com. This comes amid expectations of a 1.7% drop in home prices. Real estate brokerage Redfin has found similar optimism, predicting that homes will become more affordable next year, with mortgage rates declining to 6.6%.
Warning of Several Local Markets at Risk
However, some areas may remain vulnerable to the risks that have impacted the real estate market. The ATTOM report showed that counties around New York City and Chicago were among the most at-risk real estate markets in the country, with signs of weakness in Central California as well. Based on third-quarter data such as home affordability, underwater mortgages, foreclosures, and unemployment rates, the report found that 33 out of 50 of the most at-risk real estate markets were in California, New Jersey, and Illinois.
Warning of Several Local Markets at Risk
The concentration of issues in these areas comes at a time when the real estate market is showing mixed results, with home prices and equity improving. At the same time, affordability is deteriorating, and foreclosure activities are increasing in these at-risk areas.
Warning of Several Local Markets at Risk
“It is important to emphasize that being on the list of most at-risk does not mean an imminent collapse in any local market,” said Rob Barber, CEO of ATTOM. “It is merely an indication that they carry more potential hurdles that could lead to declines. These areas remain under observation, especially given the overall mixed trends in the market.”
Warning of Several Local Markets at Risk
In 30 out of the 50 counties considered most at risk, at least 5% of residential mortgages were “underwater,” meaning borrowers owed more than their homes were worth. While the national unemployment rate is below 4%, in 35 of the highest-risk markets, the unemployment rate was above 5%.
Warning
Warning of Several Local Markets at Risk
Similarly, the abortion rates in the 50 highest counties exceeded the national average for households facing abortion procedures in the third quarter of 2023, with the highest rate in Cumberland County, New Jersey, where one in every 359 households was in a state of abortion.
Warning of Several Local Markets at Risk
The real estate market was safer in other parts of the country, especially in the South, where 18 of the 50 least vulnerable counties were located, while 13 others were in the Midwest and 12 in New England. There were only four counties in the Western states.
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