Illinois, New Jersey And Delaware Have Most Markets At Elevated Risk From Pandemic Fallout

ATTOM released its third-quarter 2021 Special Coronavirus Report spotlighting county-level housing markets around the United States that are more or less vulnerable to damage from the ongoing Coronavirus pandemic still endangering the U.S. economy. The report shows that New Jersey, Illinois and Delaware had the highest concentrations of the most at-risk markets in the third quarter – with the biggest clusters in the New York City and Chicago areas – while the West remained far less exposed.

The third-quarter trends, which generally continued second-quarter patterns, revealed that New Jersey, Delaware and Illinois had 26 of the 50 counties most exposed to the potential housing-related impacts of the pandemic. They included eight counties in the Chicago metropolitan area, six near New York City, along with two of Delaware’s three counties. Three counties in the Philadelphia, PA, suburbs also made the top-50 list.

Elsewhere, the rest of the 50 most vulnerable counties were scattered mainly along the East Coast states. Among them, only Florida had more than three counties in the top 50.

Just two western counties, both in California, made it into the top 50 during the third quarter of this year, while the West again had the highest concentration of markets considered least vulnerable to pandemic-related damage.

Markets were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values and the percentage of average local wages required to pay for major home ownership expenses on median-priced houses or condominiums. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Rankings were based on a combination of those three categories in 570 counties around the United States with sufficient data to analyze in second and third quarters of 2021. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the three ranks. See below for the full methodology.

The third-quarter patterns, showing the most and least at-risk markets, emerged as the national housing market remained super-heated, continuing its decade-long boom, even as other major sectors of the U.S. economy only gradually rebounded from damage caused by the pandemic that hit in early 2020. Median single-family home prices continued soaring more than 10 percent on an annual basis across much of the country during the third quarter of this year, as homeowner equity kept improving.

A few signs of a possible slowdown have emerged recently in the form of declining home affordability, slumping investor profits and rising inflation. But the pandemic has started receding over the past month and the economy has continued growing, providing room for even more home-price increases.

Nevertheless, the pandemic remains a threat to the economy and the housing market as cold weather approaches and nearly half the U.S. population remains unvaccinated.

“There’s growing reason to think the Coronavirus pandemic may finally be heading into the history books as case numbers have dropped significantly in the past month or so. But it still poses a significant threat to the economy, with some housing markets in pockets of the country remaining at higher risk than others,” said Todd Teta, chief product officer with ATTOM. ”It’s important to stress that this doesn’t mean that any one area faces imminent danger, especially given how well the housing market has avoided major problems during the pandemic. Rather, some are more at risk than others. We will continue watching prices, affordability, distressed property counts and other measures to gauge the risk, as long as the pandemic remains a big issue facing the country.”

Most vulnerable counties clustered in the Chicago, New York City and Philadelphia areas, as well as Delaware

Twenty of the 50 U.S. counties most vulnerable in the third quarter of 2021 to housing market troubles connected to the pandemic (from among the 570 counties with enough data to be included in the report) were in metropolitan areas around New York, NY; Chicago, IL; Philadelphia, PA; and in the state of Delaware.

They included eight in Chicago and its suburbs (Cook, De Kalb, Du Page, Kane, Kendall, Lake, McHenry and Will counties) and seven in the New York City metropolitan area (Essex, Hunterdon, Monmouth, Ocean, Passaic and Sussex counties in New Jersey and Rockland County in New York). The three in the Philadelphia, PA, suburbs were Camden and Gloucester counties in New Jersey and Delaware County in Pennsylvania. Kent County (Dover) and Sussex County (Georgetown) in Delaware also were among the top 50 most at-risk in the third quarter.

In other states, Florida had four counties in the top 50 list: Bay County (Panama City), Clay County (outside Jacksonville), Lake County (Orlando) and Miami-Dade County. Four additional counties in Illinois also were among the 50 most exposed to pandemic-related damage. They were Champaign County, Kankakee County (south of Chicago), Madison County (outside St. Louis, MO) and Saint Clair County (outside St. Louis, MO).

The only western counties among the top 50 most at risk from problems connected to the Coronavirus outbreak in the third quarter of 2021 were Shasta County (Redding), CA, and Humboldt County (Eureka), CA.

Higher levels of unaffordable housing, underwater mortgages and foreclosure continue in most-at-risk counties

Major home ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes consumed more than 30 percent of average local wages in 27 of the 50 counties that were most vulnerable to market problems connected to the virus pandemic in the third quarter of 2021. The highest percentages in those markets were in Rockland County, NY (outside New York City) (54.8 percent of average local wages needed for major ownership costs); Monmouth County, NJ (outside New York City) (45.7 percent); Passaic County (outside New York City), NJ (43.9 percent); Beaufort County (Hilton Head), SC (42.5 percent) and Kendall County, IL (outside Chicago) (39.5 percent). Nationwide, major expenses on typical homes sold in the third quarter required 24.9 percent of average local wages.

At least 10 percent of mortgages were underwater in the second quarter of 2021 (the latest data available on owners owing more than their properties are worth) in 37 of the 50 most at-risk counties. Nationwide, 8.9 percent of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Cumberland County (Fayetteville), NC (25.8 percent of mortgages underwater); Hardin County (outside Louisville), KY (25 percent); Kankakee County, IL (outside Chicago) (24.4 percent); Saint Clair County, IL (outside St. Louis, MO) (23.4 percent); and Madison County, IL (outside St. Louis, MO) (23.1 percent).

More than one in 2,000 properties had a foreclosure filing in the third quarter of 2021 in 36 of the 50 most at-risk counties. Nationwide, one in 3,019 properties had a foreclosure filing in Q3 2021. (Foreclosure rates have dropped about 80 percent over the past year amid a federal moratorium on lenders taking back properties from homeowners behind on their mortgages during the virus pandemic. The moratorium ended July 31 and foreclosures are expected to spike over the coming year.) The worst rates in the top 50 counties in Q3 2021 were in Jefferson County, NY (north of Syracuse) (one in 454 residential properties facing possible foreclosure); Cumberland County (Vineland) NJ (one in 548); Will County, IL (outside Chicago) (one in 676); Gloucester County, NJ (outside Philadelphia, PA) (one in 696) and Atlantic County (Atlantic City), NJ (one in 709).

Counties least at-risk concentrated in South and Midwest

Thirty-three of the 50 counties least vulnerable to pandemic-related problems from among the 570 included in the third-quarter report were in the South and Midwest.

Oregon had six of the 50 least at-risk counties, including two in the Portland metropolitan area (Multnomah and Washington counties) and five in Texas, including two in the Austin area (Travis and Williamson counties). Also on the list of least vulnerable counties were Clay, Jackson and Johnson counties in the Kansas City, MO, area; Arapahoe and Denver counties in the Denver, CO, metro area; Dakota and Hennepin counties in the Minneapolis, MN area; Davidson and Rutherford counties in the Nashville, TN, area and Henrico and Richmond counties in the Richmond, VA, area.

Others among the top-50 least at-risk counties with a population of 500,000 or more included Maricopa County (Phoenix), AZ; Dallas County, TX; Mecklenburg County (Charlotte), NC; Wake County (Raleigh), NC; and Erie County (Buffalo), NY.

Less-vulnerable counties again have lower levels of unaffordable housing, underwater mortgages and foreclosure activity

Major home ownership costs (mortgage, property taxes and insurance) on the median-priced single-family home consumed less than 30 percent of average local wages in 36 of the 50 counties that were least at-risk from market problems connected to the virus pandemic in the third quarter of 2021. The lowest percentages among those counties were in Kenton County, KY (outside Cincinnati, OH) (15.8 percent of average local wages needed for major ownership costs); Potter County (Amarillo), TX (15.8 percent); Jackson County (Kansas City), MO (17.4 percent); Saint Clair County, MI (outside Detroit) (17.4 percent) and Madison County (Huntsville), AL (17.6 percent).

More than 10 percent of mortgages were underwater in the second quarter of 2021 (with owners owing more than their properties are worth) in only one of the 50 least at-risk counties. Those with the lowest rates in those counties were Chittenden County (Burlington), VT (2.6 percent of mortgages underwater); Williamson County, TX (outside Austin) (2.9 percent); Lane County (Eugene), OR (3.3 percent); Washington County, OR (outside Portland) (3.3 percent) and Marion County (Salem), OR (3.3 percent).

Those with the lowest foreclosure rates in the bottom counties were Arlington County, VA (no residential properties facing possible foreclosure); Cass County (Fargo), ND (one in 40,944); Olmstead County (Rochester), MN (one in 32,690); Marion County (Salem), OR (one in 31,553) and Imperial County, CA (outside San Diego) (one in 28,845).