Despite Housing Market Rebound, Some Northeast Pockets Remain Vulnerable: Report
Northern Virginia markets are among those least susceptible to a downturn
By Nick Trombola September 14, 2023 7:00 am
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Five Northern Virginia markets are among the least likely areas in the U.S. to experience a housing market downturn, according to a report released Thursday by property data firm ATTOM.
Despite increasingly high mortgage rates and other post-COVID hiccups, the U.S. housing market has rebounded from a brief downturn, but pockets of susceptibility remain, clustered in several key metro areas, according to the firm’s Special Housing Impact Report.
The report spotlighted the vulnerability of county-level housing markets based on home affordability, foreclosures and other factors, sourced from data taken from 574 counties in the second quarter of this year.
“The overall market and the economy remain way too strong for imminent warnings to be sounded,” ATTOM CEO Rob Barber said in a statement. “But there are weak spots that are still popping up as areas to watch, especially if the market turns back downward.”
The largest clusters of counties considered most at risk of decline are in and around the New York City, Chicago and Philadelphia areas, mostly in New Jersey and Illinois, according to the report. California, Indiana and some states along the coastal Southeast also had concentrations of counties considered most at-risk.
On the flip side, the South is on the whole less exposed to a potential downturn, along with the Northern Virginia counties near Washington, D.C. In particular, Arlington, Fairfax, Loudoun and Prince William counties — as well as the city of Alexandria — are among the 51 areas least at risk of a housing market decline, per the report.
“We continue to see pockets of the U.S. housing market where the foundation is a bit shakier — or more solid — than others, based on important quarterly metrics,” Barber said. “As with earlier reports, it doesn’t mean any one area or cluster of areas is about to crash.”
Counties were considered more or less at risk based on the amount of homes facing potential foreclosures, the amount of homes with mortgage balances exceeding their estimated property values, percentage of average local wages required for major home ownership expenses, and local unemployment rates.
Counties received a grade in each of those four categories. The overall rank of each county was calculated from a combination of the category grades.
Despite a downturn in the U.S. housing market from mid-2022 to early 2023, recent trends indicate a general market upswing.
Nationwide median home prices rose 10 percent from the first to second quarter of 2023, following a dip of 7 percent over the prior three quarters, the report said. Profits from selling homes and mortgage lending also improved in the second quarter of this year, as did the amount of foreclosures.
Although the for-sale market has teetered since the start of the COVID-19 pandemic, ATTOM concluded in a report back in April that the single-family rental market was strong, and getting stronger, due to sharp increases in mortgage rates that were preventing some people from buying homes.
Nick Trombola can be reached at NTrombola@commercialobserver.com.
