Real estate prices near NYC, Chicago are most vulnerable to a downturn

The New York City and Chicago areas are among the areas most vulnerable to falling home values ​​during the current slowdown in the US housing market, according to a new study released Thursday.

According to real estate data company Attom, nine of the 50 US counties most likely to see price declines are in or near New York City.

Another six counties at risk are near the greater Chicago area, while 13 are scattered across the state of California.

Attom’s report was based on an analysis of four categories: home foreclosure data, home affordability levels, the number of “underwater” homeowners whose remaining mortgage balance exceeded their property value, and local unemployment figures.

The categories were used to create a composite ranking for 575 counties across the country for which sufficient data was available. Counties that ranked the lowest — like those in the New York City area — were ranked as most “at risk” of a downturn.

The Federal Reserve’s move to tighten monetary policy in response to decades of high inflation has also played a key role in the recent housing market slump.

Two of the nine most vulnerable boroughs in New York are in the city.
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The number of homes under contract has recently plummeted in Manhattan.
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Mortgage rates surpassed 6% this week for the first time since 2008, marginalizing many potential home buyers and holding back demand until conditions improve.

“Given the little progress we’ve made in curbing inflation, it seems increasingly likely that Fed action will push the economy into a recession, and some housing markets will be more vulnerable than others when that happens,” Rick Sharga said. Executive Vice President of Market Intelligence at Attom.

In New York, two of the most at-risk boroughs, Kings and Richmond, are within the city. Kings County includes Brooklyn while Richmond County includes Staten Island.

Six of the remaining counties – Bergen, Essex, Ocean, Passaic, Sussex and Union – are in New Jersey, while the seventh is Rockland County in New York.

Counties in the Chicaco area are also at risk of a slowdown.
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The company found that both existing and new home sales are declining as homeowners react to the rise in mortgage rates. While the Fed’s rate hikes don’t have a direct impact on mortgages, rates typically rise during periods of monetary tightening in anticipation that borrowing will become more expensive.

Bloomberg was the first to report the data.

Inflation is also hovering near its highest level in four decades, contributing to an affordability crisis for buyers who also have to factor in house prices, which have skyrocketed when the housing market was sweltering during the COVID-19 pandemic.

Despite the slump, Attom said his findings on the most vulnerable areas “do not indicate an impending contraction in housing markets anywhere in the country.”

A growing number of pundits have been warning of a housing downturn in recent months, although most agree it will not reach the depths seen when the market imploded during the Great Recession.

According to a recent report by brokerage firm Serhant, the number of Manhattan homes on sale was down a whopping 39% year over year. Real estate prices near NYC, Chicago are most vulnerable to a downturn


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