At least three of the 50 states in the country could be at risk of experiencing a housing crash amid inventory shortages and high mortgage rates, according to a report.
California, New Jersey, and Illinois are more prone to seeing large price drops due to higher unemployment rates and a higher percentage of homeowners who have received foreclosure notices.
In contrast, counties that are the least at risk of another housing crash were predominantly in the South, the Midwest, and New England, according to the latest housing risk report from real estate data firm ATTOM. These regions are marked by strong employment and fewer homeowners at risk of losing their homes to foreclosures.
"Some parts of the country continue to pop up on the radar as places to watch for signs of housing-market drop-offs, based on key quarterly measures," Rob Barber, CEO at ATTOM, said in the report.
"Once again, it is important to stress that getting onto the most vulnerable list doesn't signal an imminent crash for any local market. It just means that they have greater potential tripwires that could lead to a decline. Those remain areas to watch, especially given the overall varied trends in the market," he added.
Which Counties Are Most at Risk of Experiencing a Housing Crash?
The report noted that 33 of the 50 counties that were the most vulnerable to experiencing a housing crash were found in California, New York, and Illinois. However, New York City had the most neighborhoods that could be at risk of experiencing large price drops, including Brooklyn, Staten Island, and the Bronx.
New York City was closely followed by the Chicago metropolitan area, where seven counties were found to be the most vulnerable to a housing crash, including Cook, DeKalb, Kane, Lake, and McHenry.
Six suburbs were found to be most at-risk in New Jersey, including Bergen, Essex, Ocean, Passaic, Sussex, and Union.
In California-specifically the central region-the most at-risk were Fresno, Madera, Merced, San Joaquin County, and Stanislaus.
How Were At-Risk Counties Determined?
The firm took into consideration a number of factors to determine which counties were most at risk of a housing crash. These factors included the percentage of homes facing possible foreclosure, mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for home ownership, and local unemployment rates.
