NYC, Chicago Primed For Home Price Declines

New York City and Chicago are primed for severe home price declines if the market turns down.

That’s according to ATTOM’s latest Special Housing Risk Report, which highlights county-level housing markets that are primed for declines based on factors like affordability, foreclosures, and underwater mortgages.

In Q1 2024, California, New Jersey, and Illinois had the highest concentration of at-risk markets in the country, propelled by counties surrounding NYC and Chicago. Inland CA holds a cluster of concerning markets, adding it to the top three.

The rest of the metros on ATTOM’s high-risk list are scattered throughout the U.S.

Homeownership costs– including mortgage payments, taxes, and insurance– accounted for one-third of average local wages in 36 of the 50 most vulnerable counties.

With inflation still raging, especially regarding shelter costs, some Americans are struggling to maintain their lifestyles while making home payments. Foreclosure activity is edging up, though it remains lower than pre-pandemic levels.

In contrast, the South and Midwest regions are shielded from the possibility of big drops. Virginia, Wisconsin, and Tennessee contain 22 of the 50 markets least likely to see major price declines.

“The patterns of varying market vulnerability that we’ve been seeing over the past few years are pretty much continuing in place, with some of the same areas falling out at opposite ends of the trend line,” said Rob Barber, CEO at ATTOM.

“Once again, this is not to suggest that any one market is facing imminent decline. It’s more a measure of vulnerability gaps. But with the housing market slowing down over the past year, some metro areas appear notably better positioned than others to withstand a scenario of the market topping out and heading downward.”

Some markets are already facing headwinds. Sale prices are declining YOY in Austin (-2.9%), San Antonio (-1.2%), and Fort Worth, TX, (-1.2%), plus Portland, OR (-0.9%). These pandemic boomtowns saw home prices soar, and that spike in costs is now repelling affordability-minded buyers.

Meanwhile, a construction boost in Florida is at odds with decreased buyer demand thanks to natural disasters and rising housing costs, leading to the state’s West Coast housing markets cooling faster than anywhere else in the country.

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