Housing Market Outlook 2025: Prices May Dip but Risks Concentrate in California, New Jersey & Illinois

Counties in California, New Jersey, and Illinois Lead the Nation in Housing Market Vulnerability in 2024

Essential Insights

• ATTOM's latest report identifies counties in California, New Jersey, and Illinois as the most vulnerable housing markets nationwide.
• High foreclosure rates, underwater mortgages, and elevated unemployment contribute to these risks, contrasting with more stable markets in the South and Midwest.
• Experts anticipate a slight drop in housing prices by 1% or more in 2024, with mortgage rates projected to decrease to approximately 6.5%.

Following a challenging year marked by mortgage rates hitting highs not seen in over two decades, 2024 is expected to bring a housing market rebound. However, a new analysis highlights certain local markets at significant risk of declining home values.

Counties within California, New Jersey, and Illinois are particularly susceptible due to a combination of foreclosure activity, affordability challenges, and mortgage rate pressures, according to ATTOM's Special Housing Risk Report.

Based on third-quarter data, the report coincides with real estate forecasts predicting improved market conditions ahead. Mortgage rates, which soared above 8% in 2023, are forecasted to fall to an average near 6.8%, potentially reaching 6.5% by year-end 2024, as per Realtor.com. Concurrently, home prices are expected to soften by about 1.7%. Redfin aligns with this outlook, noting increased affordability as mortgage rates decline to roughly 6.6%.

Despite this positive outlook, specific regions remain vulnerable. ATTOM highlights counties surrounding New York City, Chicago, and central California as showing notable signs of housing market stress. Evaluating factors such as home affordability, underwater mortgages, foreclosure rates, and unemployment, 33 of the 50 most at-risk counties are concentrated in these three states.

These vulnerabilities emerge amid a mixed market landscape where home prices and equity see gains, but affordability worsens and foreclosures rise in these high-risk areas.

Rob Barber, CEO of ATTOM, emphasizes, “Being on the vulnerable list doesn’t signal an imminent crash; it indicates increased potential triggers for declines. These regions warrant close monitoring amid the market’s varied trends.”

In 30 of these 50 counties, over 5% of residential mortgages are underwater, meaning homeowners owe more than their property’s current value. Moreover, 35 vulnerable markets experience unemployment rates exceeding 5%, above the national average below 4%.

Foreclosure filings in these counties surpass the national average of one in 1,389 homes, with Cumberland County, New Jersey, leading at one in every 359 homes facing foreclosure.

Conversely, housing markets in the South and Midwest exhibit greater stability, with 18 of the 50 least vulnerable counties located in the South, 13 in the Midwest, and 12 in New England. Only four low-risk counties are found in western states.

Have news for ZAMONA? Share your tips with us at tips@ZAMONA.

Discover engaging topics and analytical content in Economic News as of 13-12-2023. The article titled " Housing Market Outlook 2025: Prices May Dip but Risks Concentrate in California, New Jersey & Illinois " provides new insights and practical guidance in the Economic News field. Each topic is meticulously analyzed to deliver actionable information to readers.

The topic " Housing Market Outlook 2025: Prices May Dip but Risks Concentrate in California, New Jersey & Illinois " helps you make smarter decisions within the Economic News category. All topics on our website are unique and offer valuable content for our audience.