These CA Counties Are At Risk Of Housing Market Instability: Report

California is among three states facing a particularly elevated risk of housing market decline, according to a report released this week by data curator ATTOM based on several measures from the fourth quarter of 2023.

The report shows that California, along with Illinois and New Jersey, had some of the highest concentrations of at-risk markets nationwide, with the three states accounting for 34 of the 50 counties considered most vulnerable to potential market drop-offs.

The national median home price was flat over the summer and declined 3 percent in the fall after a springtime surge stalled out. Dropping prices late in the year slightly deflated homeowner equity and raised underwater mortgage rates, according to ATTOM.

But even as values dipped, home affordability took up at least a third of average local wages in most of the U.S., putting the nation’s 12-year housing market boom at risk, ATTOM reported.

“As always, this is not a warning sign for homeowners to run out and sell, or rush to buy, in any specific market," ATTOM CEO Rob Barber said in a news release.

"The housing market remains strong throughout most of the country despite some recent small downturns. Rather, this report again spotlights areas that appear more or less exposed to a market fall, should that start to happen, based on key measures.”

The nation's 50 most at-risk counties include six in and around New York City, five in the greater Chicago area and 14 in inland California. At the other end of the spectrum, the Midwest and South had the highest number of markets considered least likely to decline, according to ATTOM.

California counties listed among those most at-risk included Riverside, San Bernardino, Butte, Sacramento, El Dorado, Solano, Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislas and Tulare.

Risk was assessed based on the percentage of homes facing possible foreclosure, the portion with mortgage balances exceeding estimated property values, the percentage of average wages required to pay for major homeowner expenses on median-priced houses and unemployment rates.

The November unemployment rate was at least 4 percent in 39 of the 50 at-risk counties, while the rate nationwide was 3.7 percent, ATTOM reported. The highest rates in the top 50 counties were all in central California, with Tulare County at 10.2 percent, Merced County at 8.5 percent, Kings County at 8 percent, Kern County at 7.8 percent and Fresno County at 7.6 percent.

Major homeownership costs — such as mortgage payments, property taxes and insurance — on median-priced houses consumed over a third of average wages in 43 of the 50 counties considered most vulnerable nationally, according to ATTOM.

The places in the 50 most at-risk markets with the highest percentages of average wages used for major ownership expenses included Riverside County with 74.2 percent, El Dorado County with 73.7 percent and Contra Costa County with 67.2 percent. Kings County in Brooklyn, New York, had the highest percentage at 114 percent and Passaic County in New Jersey had 67.1 percent.