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- Places where homes are expensive and unemployment is high are at risk for housing-market declines.
- Real-estate data firm Attom evaluated which counties across the country are most vulnerable.
- Parts of Chicago, New York, and northern California are most at risk of declines. See the full list.
As the economy teeters on the brink of a recession, the country's housing markets could be in for a downturn.
A new report from Attom Data Solutions, a real-estate data provider, offers a perspective on which areas could be most vulnerable to declines — whether it's in home prices, sales activity, or other indicators of overall health.
Existing homeowners may whinge at the thought of property values decreasing, but this data could be useful for homebuyers on a tight budget and real-estate investors who are keeping a close eye on markets that could experience further softening. While it's impossible to time the market — and it's risky to assume that prices in any one place will continue to increase — being aware of which areas are currently vulnerable may benefit anyone looking for a deal on a home.
Attom's researchers looked at a number of key indicators to determine the overall health of a region's real-estate market. The number of homes where owners owe more than they're worth, for example, indicates the prevalence of homeowners who "underwater" on their mortgage and may eventually need to sell. Such a sell-off would provide opportunistic buyers with good deals.
The report authors also looked at the number of properties currently under foreclosure, which means that lenders are currently in the process of repossessing the homes. They also looked to see if the median sale prices of a county was out of step with the percentage of the area's average income needed to pay for a home. Home prices that are out of reach for many locals suggests they are overly elevated. Last, the local unemployment rate is a sign of weak short-term economic prospects, and could mean that those out of a job, with no steady income, may need to list their home for sale.
There are a few key takeaways from the report. One is that the counties around major cities such as Chicago and New York are particularly vulnerable. The data also helps illustrate just how unaffordable homes are are in California and New York, where there are more people who are cost-burdened — or those who spend 30% or more of their take-home pay on housing. (A general rule of thumb is to spend 28% or less of your monthly income on housing costs, according to personal-finance experts.)
Out of the 581 counties Attom analyzed, here's a look at the 21 counties that are most vulnerable to a decline. They're listed in order from least to most vulnerable.
By David Wilson from Oak Park, Illinois, USA - 20030720 22 East St. Louis, IL, CC BY 2.0
Median home price: $153,000
Percent of income required to buy a house: 22.4%
Number of underwater mortgages: 8,255
Foreclosure filings: 909
Unemployment rate: 4.4%
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Median home price: $267,000
Percent of income required to buy a house: 25%
Number of underwater mortgages: 124,859
Foreclosure filings: 3,216
Unemployment rate: 4.9%
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Median home price: $485,000
Percent of income required to buy a house: 48%
Number of underwater mortgages: 6,633
Foreclosure filings: 397
Unemployment rate: 3.8
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Median home price: $223,000
Percent of income required to buy a house: 38%
Number of underwater mortgages: 2,529
Foreclosure filings: 97
Unemployment rate: 3.8
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Median home price: $285,000
Percent of income required to buy a house: 48.7%
Number of underwater mortgages: 1,842
Foreclosure filings: 72
Unemployment rate: 3.5
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Median home price: $414,000
Percent of income required to buy a house: 52.1%
Number of underwater mortgages: 3,876
Foreclosure filings: 127
Unemployment rate: 4.2%
US Marine Corps/Cpl. Daniel A. Wulz
Median home price: $235,000
Percent of income required to buy a house: 37.4%
Number of underwater mortgages: 2,660
Foreclosure filings: 145
Unemployment rate: 4.5%
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Median home price: $187,000
Percent of income required to buy a house: 28.1%
Number of underwater mortgages: 2,835
Foreclosure filings: 152
Unemployment rate: 4.3%
Scott Olson/Getty Images
Median home price: $285,000
Percent of income required to buy a house: 44.4%
Number of underwater mortgages: 7,091
Foreclosure filings: 179
Unemployment rate: 3.4%
Benjamin Tankersley/Getty Images
Median home price: $390,000
Percent of income required to buy a house: 49.8%
Number of underwater mortgages: 2,834
Foreclosure filings: 113
Unemployment rate: 3.5%
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Median home price: $190,000
Percent of income required to buy a house: 26.1%
Number of underwater mortgages: 2,744
Foreclosure filings: 240
Unemployment rate: 5.5%
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Median home price: $345,000
Percent of income required to buy a house: 43.5%
Number of underwater mortgages: 1,761
Foreclosure filings: 109
Unemployment rate: 4.4%
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Median home price: $174,000
Percent of income required to buy a house: 27.9%
Number of underwater mortgages: 2,960
Foreclosure filings: 63
Unemployment rate: 5.3
Ben Krut/Getty Images
Median home price: $280,000
Percent of income required to buy a house: 40%
Number of underwater mortgages: 12,130
Foreclosure filings: 479
Unemployment rate: 4.1%
Matt Gush/Getty Images
Median home price: $400,000
Percent of income required to buy a house: 53%
Number of underwater mortgages: 1,209
Foreclosure filings: 61
Unemployment rate: 6.3%
Nejdet Duzen/Shutterstock
Median home price: $299,000
Percent of income required to buy a house: 41.2%
Number of underwater mortgages: 9,351
Foreclosure filings: 231
Unemployment rate: 4.3
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Median home price: $630,000
Percent of income required to buy a house: 70.1%
Number of underwater mortgages: 3,441
Foreclosure filings: 275
Unemployment rate: 4.9
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Median home price: $279,950
Percent of income required to buy a house: 38.1%
Number of underwater mortgages: 6,523
Foreclosure filings: 190
Unemployment rate: 4.1
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Median home price: $450,000
Percent of income required to buy a house: 59.6%
Number of underwater mortgages: 5,267
Foreclosure filings: 213
Unemployment rate: 3.8%
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Median home price: $392,000
Percent of income required to buy a house: 51.6%
Number of underwater mortgages: 2,168
Foreclosure filings: 93
Unemployment rate: 4.4%
Nagel Photography/Shutterstock
Median home price: $320,000
Percent of income required to buy a house: 39.3%
Number of underwater mortgages: 2,203
Foreclosure filings: 128
Unemployment rate: 4.7%