13 California counties land on ‘riskiest housing markets’ list

California has 13 of the nation’s housing markets most vulnerable to price declines in a potential economic downturn, according to real estate data analytics firm Attom.

Of the 50 counties rated most at risk of 575 studied, 13 are spread across California, including San Bernardino and Riverside. Nine are in and around New York City, and six are in the Chicago metropolitan area, the report stated.

All of these counties have higher levels of unaffordable housing, more mortgages larger than home values, above-average foreclosure rates and troublesome unemployment. Counties the least at risk were concentrated in the South and Midwest, apart from Chicago.

After a pandemic-related boom, the Federal Reserve’s aggressive tightening policy and elevated inflation are crimping the once-booming US housing market. Rising mortgage rates have helped to dampen sales and force an increase in income needed to cover a typical home payment.

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“Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens,” said Rick Sharga, executive vice president of market intelligence at Attom.

California’s slice

Here’s how Attom ranked 36 California markets in the study of 576 counties, including the share of income required to buy a typical home, percentage of homes “underwater” — bigger mortgages than property’s value; and the local jobless rate.

The highest on the list was Butte County (Chico) at No. 15 where projected house payments run 49% of local incomes; 5.6% of homes are underwater and there’s a 7.7% unemployment rate.

Then comes …

No. 17 Madera: 48% income ratio; 16.0% underwater; 9.8% unemployment.

No. 23 Merced: 49% income ratio; 7.8% underwater; 11.5% unemployment.

No. 24 Kern: 39% income ratio; 3.5% underwater; 11.3% unemployment.

No. 26 Shasta: 42% income ratio; 8.3% underwater; 7.5% unemployment.

No. 28 San Bernardino: 55% income ratio; 16.1% underwater; 8.5% unemployment.

No. 30 Kings: 41% income ratio; 7.6% underwater; 10.9% unemployment.

No. 33 Riverside: 68% income ratio; 6.7% underwater; 8.4% unemployment.

No. 40 San Joaquin: 59% income ratio; 5.6% underwater; 9.6% unemployment.

No. 42 Humboldt: 51% income ratio; 4.2% underwater; 6.9% unemployment.

No. 43 Tulare: 41% income ratio; 4.6% underwater; 11.7% unemployment.

No. 45 Solano: 55% income ratio; 10.4% underwater; 8.3% unemployment.

No. 48 Fresno: 45% income ratio; 5.6% underwater; 10% unemployment.

No. 51 Stanislaus: 48% income ratio; 4.3% underwater; 9.5% unemployment.

No. 58 El Dorado: 69% income ratio; 11.3% underwater; 6.4% unemployment.

No. 95 Los Angeles: 66% income ratio; 17.5% underwater; 10% unemployment.

No. 108 Contra Costa: 65% income ratio; 13.0% underwater; 7.3% unemployment.

No. 116 Sacramento: 45% income ratio; 4.5% underwater; 7.8% unemployment.

No. 123 Monterey: 85% income ratio; 16.1% underwater; 7.9% unemployment.

No. 137 Sonoma: 68% income ratio; 5.6% underwater; 6.1% unemployment.

No. 138 Ventura: 75% income ratio; 2.9% underwater; 6.8% unemployment.

No. 140 Yolo: 56% income ratio; 22.5% underwater; 6.5% unemployment.

No. 147 Napa: 83% income ratio; 7.9% underwater; 6.4% unemployment.

No. 165 San Diego: 66% income ratio; 7.0% underwater; 7.3% unemployment.

No. 183 Placer: 62% income ratio; 7.9% underwater; 5.7% unemployment.

No. 199 Orange: 82% income ratio; 5.3% underwater; 6.9% unemployment.

No. 201 Alameda: 77% income ratio; 7.1% underwater; 6.9% unemployment.

No. 217 Nevada: 68% income ratio; 6.6% underwater; 6.2% unemployment.

No. 220 San Luis Obispo: 88% income ratio; 14.5% underwater; 5.9% unemployment.

No. 225 Imperial: 40% income ratio; 3.4% underwater; 18.8% unemployment.

No. 228 Santa Barbara: 76% income ratio; 15.9% underwater; 6.2% unemployment.

No. 346 Santa Cruz: 116% income ratio; 6.6% underwater; 7.2% unemployment.

No. 359 San Francisco: 50% income ratio; 12.8% underwater; 5.9% unemployment.

No. 380 Marin: 110% income ratio; 3.8% underwater; 5.1% unemployment.

No. 445 San Mateo: 55% income ratio; 8.5% underwater; 5.3% unemployment.

No. 459 Santa Clara: 49% income ratio; 5.5% underwater; 5.4% unemployment.

Other challenges

The most vulnerable New York City counties include Kings and Richmond counties, which cover Brooklyn and Staten Island, and seven counties in the suburbs: Bergen, Essex, Ocean, Passaic, Sussex, Union and Rockland. New York County, or Manhattan, ranks 52 out of the 575 analyzed. Passaic and Essex counties in New Jersey top the list respectively at first and second.

The seventh most at risk is Cook County, which holds Chicago and is the only one with a population of at least 1 million that ranks among the top 25.

Counties with a minimum population of 500,000 that were among the 50 safest include Washington’s King County, which encompasses Seattle; Texas’s Travis County which includes Austin; Utah’s Salt Lake County; Wake County in North Carolina, and Cobb County in Georgia, according to the report.

The report gauged risks that housing markets face based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average wages required to pay for major homeownership expenses on median-priced single-family homes, and unemployment rates as of the second quarter this year.

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