COVID-19 housing impact: which homeowners are most vulnerable? New research spotlights housing markets that are most at-risk in the U.S.

The COVID-19 pandemic is having an impact on many parts of the economy: Mortgage interest rates hit an all-time low last week (a 30-year fixed-rate loan can be had for an average of 2.98 percent) while the stock market is closing in on its all-time high. Homes are selling at a faster pace than a year ago, and for more money, as anxious buyers bid up prices in order to win multiple bid offers, even as more than 32 million Americans file for unemployment benefits (17.4 million in continuing claims + 1.3 million first-time unemployment claims + 14.3 million self-employed individuals who filed for special PUA benefits). 

But which parts of the country are most vulnerable economic problems connected to COVID-19? 

The latest report by ATTOM Data Solutions analyzed 406 counties in the U.S. and considered markets to be more or less at risk based on the percentage of homes currently facing possible foreclosure or are “underwater” (where the mortgage balances exceeds the estimated property value), and the percentage of local wages required to pay for major homeownership expenses, such as the mortgage, taxes and insurance. 

Based on their analysis, housing markets that are most at-risk are clustered on the East Coast and in parts of northern Illinois. 

COVID-19 Housing Impact: Which Homeowners Are Most Vulnerable?

The housing markets most vulnerable to the impact of the COVID-19 pandemic are largely located in and around major metropolitan areas where the cost of homeownership exceeds more than 30 percent of the average local wage. In these communities, at least 15 percent of mortgages are underwater and more than one in 750 residential properties faced a foreclosure action in the first quarter of 2020. 

To put it into perspective, the last time we saw numbers like this was a decade ago, during the housing crisis. 

Housing Markets Most Vulnerable to Impact of COVID-19

Homeowners who are most vulnerable to the economic impact of the COVID-19 pandemic live in the following communities: 

New York: Nassau, Orange, Rockland, Suffolk and Westchester counties
New Jersey: Bergen, Essex, Hunterdon, Middlesex, Sussex and Union counties
Illinois: Cook, De Kalb, Du Page, Kendall, Lake, McHenry and Will counties
Maryland: Baltimore, Carroll, Cecil, Harford, Charles, Prince George’s and Frederick
Virginia: Spotsylvania and Stafford counties
Connecticut: Litchfield, Middlesex, New Haven, Tolland and Windham counties
California: Humbold, Madera, Riverside and Shasta counties

Housing costs consumed the majority of average local wages in areas like Westchester County, NY (77.1 percent), Rockland County, NY (71.1 percent), Nassau County, NY (63.4 percent), Riverside County, CA (62.5 percent) and Bergen County, NJ (58.5 percent).

Markets with the highest percentage of underwater mortgages included Sussex County, NJ (39.2 percent), Monroe County, PA (36.3 percent), Cumberland County, NJ (35.7 percent), Livingston County, LA (34.3 percent) and Saint Clair County, IL (34.2 percent).

Foreclosure activity was highest in markets such as Cumberland, NJ (one  in every 180 properties), Sussex County, NJ (one in every 210), Camden County, NJ (one in every 231), Atlantic County, NJ (one in every 293) and Will County, IL (one in every 294). 

Housing Markets Least Vulnerable to the Impact of COVID-19

Homeowners who are least at-risk of losing their home to foreclosure or short sale are concentrated in areas like Colorado, Oregon, Texas and Wisconsin, where there are lower levels of unaffordable housing, underwater mortgages and foreclosure activity.

Homeownership was most affordable in markets where costs consumed well under 30 percent of average local wages in markets like Winnebago County, WI (18.6 percent), Benton County, AR (21.1 percent), Racine County, WI (21.4 percent), Sheboygan County, WI (21.6 percent), and Monroe County, MI (22.7 percent).

Markets with the lowest percentage of underwater mortgages included San Mateo County, CA (2 percent), Chittenden County, VT (3.6 percent), King County, WA (4.5 percent), Dallas County, TX (4.7 percent) and Washington County, OR (4.9 percent).

Foreclosure activity was lowest in markets such as San Mateo County, CA (one in 12,566 properties), Washington County, WI (one in 6,259), Chittenden County, VT (one in 5,755); Eau Claire County, WI (one in 5,471) and Yolo County, CA (one in 4,306).

The question on every housing economists’ mind: What happens to foreclosure rates once the extra $600 in weekly unemployment assistance is eliminated (which it will be by the end of July)? 

The easy answer: Nothing good. 

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