Data provider Attom tracked the 50 U.S. neighborhoods most at risk of further housing declines. Half of them are located in one of three places.
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Data provider Attom said New York City, Chicago and parts of inland California could be at risk of local housing bubbles bursting if conditions worsen nationwide.
company’s latest report Fifty communities were identified that may be particularly vulnerable to such risks based on housing affordability, unemployment and the prevalence of distressed or underwater properties in the fourth quarter of 2023.
Attom chief executive Rob Barber clarified in a statement that the analysis was not a prediction of an imminent housing bubble bursting in these areas.
“Despite some recent minor declines, the housing market remains strong across much of the country,” Barbour’s statement read. “Instead, this report once again highlights those areas that appear to be more or less affected by the market decline. , based on key indicators, if that starts to happen.”
Areas of California far from the coast are particularly at risk. Attom believes these outback areas account for 14 of the 50 communities most at risk from a potential decline in housing.
Six of the other highest-risk communities are in the New York City area, including five in or near Chicago.
By the same yardstick, other parts of the country, particularly the South and Midwest, have been particularly resilient to downturns in local housing markets.
In California, communities’ risk conditions are particularly likely to be caused by high unemployment or extreme affordability, the report noted.
In Riverside County, California, it takes 74% of the local average wage to cover the cost of ownership of a mid-priced single-family home. The area, located east of Los Angeles and including the cities of Riverside and Palm Springs, ranked second among the least affordable in high-risk areas.
To the north, more than 10% of the local workforce is out of work in counties outside Fresno, including Sequoia National Park and surrounding towns, putting pressure on the local housing market. This is well above the national unemployment rate of 3.7%.
The method also takes into account the proportion of the home that is underwater, meaning the property is estimated to be worth less than the remaining amount of its outstanding loan.
Nationally, just 6% of homes with mortgages are underwater, a relatively low proportion that reflects continued sluggish trading amid years of rapid price growth.
In some communities, however, the rates are much higher.
In Tangipahoe Parish, Louisiana, about 50 miles east of Baton Rouge, it is estimated that nearly 23 percent of homes with mortgages are worth less than the debt on the property.
Two Illinois communities near St. Louis — St. Clair and Madison counties — also rounded out the top five with the highest percentage of properties mortgaged underwater. Both exceed 14%.
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