America’s housing market hasn’t been this healthy in decades, if ever. The closely tracked S&P Case-Shiller House Price Index showed that house prices increased by nearly 19% in December, close to a record in the history of the index. In some cities, this figure was closer to 30%.
However, not all places in the United States enjoy a healthy housing market, and some have been negatively affected by the pandemic. The riskiest housing market in America is Sussex County, New Jersey.
Several factors have pushed home prices higher. One is extremely low mortgage rates, although rates have started to rise. Another is that middle and upper class incomes have not been affected much by the pandemic. Yet another is the new mobility of Americans, who want to move from expensive coastal cities to ones with a lower cost of living and better quality of life. In fact, the high cost of living, which includes housing costs, can increase the risk of a housing market. (These are the most expensive states to live in.)
Also, not all markets have seen strong house price increases. Despite the strength of the real estate market, there are still many counties where the housing market is at heightened risk from the impact of the pandemic, either directly or indirectly.
These areas have higher than average foreclosure rates and shares of homes with higher than average underwater mortgages, meaning the value of outstanding mortgage balances exceeds the total property value. Some of these markets are also much less affordable than average, with high ownership costs relative to local incomes.
Based on an index of these three measures – foreclosure rates (on all residential properties), share of underwater mortgages, and affordability (ownership costs as a percentage of average local wages) – at the county level, 24/ 7 Wall St. identified the most risky housing market. All data sourced from property and property data company ATTOM Data Solutions’ First Quarter 2021 Coronavirus Special Report. The data used is from the first quarter of 2021, except for the estimated market values of the houses which are from the fourth quarter of 2020.
Many of the most at-risk counties are located in the eastern United States, stretching from Florida to the mid-Atlantic and New England. The pandemic has wrought above-average economic and public health havoc in some of those counties. (It is the most expensive city to buy a house in all the states.)
In Sussex County, which is in the New York-Newark-Jersey City metropolitan area, typical homeownership costs as a share of median income are 40.6%, while there are 7,646 homes with underwater mortgages, or 18.3% of houses with loans. .
Click here to see the riskiest housing market in America