Housing market risk steepest in southern, western areas

A growing number of U.S. housing markets face elevated risks from high foreclosure rates, underwater mortgages and rising costs, according to a new report.

ATTOM analyzed 579 counties nationwide for its second-quarter Housing Risk Report — with ranking criteria including affordability, foreclosure activity, mortgage equity and unemployment.

California and Florida counties were heavily represented among the nation’s most vulnerable markets.

Of the 50 riskiest counties, 14 were in California and seven were in Florida. New Jersey had five and Louisiana had four.

The five counties ranked as most at risk were Charlotte County, Fla.; Humboldt County, Calif.; Shasta County, Calif/; Butte County, Calif.; and Cumberland County, New Jersey.

Each had foreclosure ratios of at least one in every 766 homes and unemployment rates above June’s national average of 4.36%.

“This summer’s home prices were certainly eye-catching, but there are many factors that contribute to the health of a local housing market,” said Rob Barber, CEO of ATTOM. “Our index takes into account key indicators beyond just sales price to create a barometer that helps folks better understand where their market is headed.

“There’s uncertainty about how long prices can keep going up, and what will happen with the broader economy. That can be scary for owners and prospective buyers who don’t always get a full view of their market.”

Affordability pressures

Nationwide, homeownership expenses — including mortgage payments and property costs — consumed an average of 33.7% of annual wages during the second quarter.

But in some counties, costs exceeded what a typical worker could cover in a year.

In Marin County, Calif., ownership expenses equaled nearly 120% of annual wages. Santa Cruz County, Calif,, and Maui County, Hawaii, also required more than 110%.

Kings County, New York, and San Luis Obispo County, Calif., rounded out the top five least affordable markets.

In 111 counties, or about 19% of those studied, at least half of local wages would have been needed for home expenses. In nearly two-thirds of counties, ownership costs consumed at least a third of income.

Underwater mortgages, foreclosures

Nationally, 2.7% of homes were “seriously underwater,” meaning loan balances exceeded property values by at least 25%.

In 223 counties, the rate was higher than the national average.

Seven of the 10 counties with the highest underwater mortgage rates were in Louisiana. Rapides Parish led with 17.3% of homes seriously underwater — followed by Calcasieu Parish at 16.9%.

Foreclosures also weighed heavily in several markets.

One in every 1,413 homes nationwide faced foreclosure during the quarter. The highest rates were in Dorchester County, S.C. (one in 355 homes), Charlotte County, Fla. (one in 372), and Oswego County, New York (one in 427).

About 35% of counties analyzed had unemployment rates above the national average in June.

Imperial County, Calif., had the highest rate at 19%, followed by Yuma County, Ariz., at 15.2%.

Regional divides

Southern counties appeared frequently on both ends of the index.

Of the least risky counties, 18 were in the South and 18 in the Northeast. New York had eight counties on the low-risk list, while Wisconsin had seven.

Among the most stable markets were Chautauqua County, New York, where home expenses accounted for just 17.8% of wages, and Potter County, Texas, at 19.6%.

None of the 50 lowest-risk counties had unemployment rates above the national average. Several — including Cumberland County, Maine, and Chittenden County, Vt. — reported rates near or below 2.5%.