NJ Has Most 'Vulnerable' Housing Markets In Nation: Report

NEW JERSEY — Two New Jersey counties have the most vulnerable housing markets in the nation, according to a new analysis of real estate data. And several counties show significant susceptibility to declines, according to ATTOM's report.

Essex County topped the real estate data curator's national rankings of housing-market vulnerability, with Passaic County ranking second. Atlantic (eighth), Cumberland (11th) and Sussex Counties (26th) weren't far behind.

Many New Jersey housing markets — particularly in North Jersey — strengthened early in the pandemic but have steadily cooled since the July 2021 peak, according to the New Jersey State Policy Lab of Rutgers University. Some of the nation's biggest clusters of at-risk markets, according to ATTOM, include the New York City and Philadelphia areas, which could mean bad news for swaths of New Jersey homeowners.

"As the prospect of a possible recession hangs over the U.S. economy, counties in three of the seven largest metropolitan areas — New York City, Chicago, and Philadelphia — are among the most vulnerable to a potential downturn in their housing markets," said Rick Sharga, ATTOM's executive vice president of market intelligence. "These counties, and many more in Central California, share a number of traits — poor affordability, relatively high unemployment and foreclosure rates, and homeowners who are underwater on their loans — which could spell trouble if the economy takes a turn for the worse."

ATTOM used data from the third quarter of 2022 (July through September), basing its calculations of county-level housing vulnerability on gaps in home affordability, underwater mortgages, foreclosures and unemployment.

Some counties, including three in New Jersey, didn't have enough data for inclusion in ATTOM's report. But of the 581 counties included, here's where the Garden State's housing markets ranked in terms of vulnerability:

• 1. Essex County
• 2. Passaic County
• 8. Atlantic County
• 11. Cumberland County
• 26. Sussex County
• 34. Warren County
• 35. Union County
• 44. Gloucester County
• 54. Camden County
• 55. Ocean County
• 72. Bergen County
• 109. Middlesex County
• 123. Burlington County
• 138. Hunterdon County
• 156. Monmouth County
• 158. Mercer County
• 187. Morris County
• 242. Somerset County

The U.S. housing market had one of its weakest third quarters in the past decade, according to ATTOM. Key measures of the period included the national median home value decreasing 3 percent, home-seller profits declining, and foreclosures doubling, compared to the same timeframe in 2021. This occurred as 30-year mortage rates climbed near 7 percent, inflation remained at a 40-year high and the stock market fell — all factors that cut into what homebuyers can afford.

Nationwide, 1 in 1,517 residential properties faced a foreclosure action in the third quarter of 2022, according to ATTOM. Meanwhile, two New Jersey counties had significantly higher foreclosure rates in that span: Sussex County (1 in 410, third in the nation) and Cumberland County (1 in 433, fourth in the U.S.).

Major home-ownership costs — mortgage payments, property taxes and insurance — consumed a significant portion of wages in several New Jersey counties. ATTOM calculated housing unaffordability by comparing average local wages with the aforementioned costs on median-priced, single-family homes.

Nationwide, major expenses on typical homes sold in the third quarter required 30 percent of average local wages. Several portions of New Jersey showed far-higher rates, including Monmouth (60.6 percent), Bergen (57.9 percent), Hunterdon (56.3 percent), Passaic (54.1 percent), Ocean (49.4 percent), Essex (47.6 percent) and Sussex Counties (45.7 percent).

Read ATTOM's full report here.