By RIA JOSEPH
THE CENTER SQUARE CONTRIBUTOR
(The Center Square) – A Special Housing Risk Report looking at fourth-quarter 2022 housing market vulnerabilities in various counties across the United States found that inland California ranked among those that continued to have some of the highest concentrations of the most-at-risk markets in the country.
The ATTOM report analyzed home affordability, equity and foreclosures and focused on the levels of unaffordable housing, underwater mortgages, foreclosures and unemployment.
California had 13 counties in the top 50 list of most-vulnerable counties: Butte County (outside Sacramento), Humboldt County (Eureka), San Joaquin (Stockton), Solano County (outside Sacramento) and Shasta County (Redding) in the northern part of the state; Fresno County, Madera County (outside Fresno), Merced County (outside Modesto), Stanislaus County (Modesto) and Tulare County (outside Fresno) in central California, and Kern County (Bakersfield), Riverside County and San Bernardino County in the southern part of the state.
Counties most vulnerable to market troubles in the last quarter of 2022 affected the cost of single-family homes and condos, consuming more than one-third of the average local wages in the county to cover mortgage payments, property taxes and insurance. Nationwide these costs on typical homes for the same period required 32.3% of local wages. However, in Riverside County, it was 70% of wages and in San Joaquin County, 63.6%, landing those California counties in 3rd and 4th place for the most elevated levels of unaffordable housing in the country.
San Mateo, CA and Santa Clara County (San Jose) had underwater mortgage rates (negative equity) or rates with homeowners owing more on their mortgages than the estimated value of their properties, but the percentages were small, just 1.9% for San Mateo and 2% for Santa Clara.
A CoreLogic Homeowner Equity Report revealed that California posted annual home equity decreases in the amount of $8,500, being only one of four territories in the United States to show negative year-over-year equity gains.
“While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity more than they had at the onset of the pandemic,” said Selma Hepp, chief economist at CoreLogic.
“Nevertheless, with 66,000 borrowers entering negative equity in the fourth quarter, the total number of underwater properties is now approaching levels seen at the end of 2021, which was the lowest since the Great Recession,” Hepp said. “The new hot spots for equity declines are largely markets that have seen the most significant home price deceleration, including Boise, Idaho; the San Francisco Bay Area; cities in Utah; Phoenix and Austin, Texas.”
Foreclosures and Unemployment
California did not rank among the counties vulnerable to foreclosures but swept the ratings for unemployment. November 2022’s unemployment rate saw levels higher than the national average of just over three and a half percent, with the highest levels of all 50 counties analyzed in California.
The highest unemployment rates in the nation were: Tulare County, CA (outside Fresno) (8.6%); Merced County, CA (outside Modesto) (7.3%); Kern County (Bakersfield), CA (6.8%); Fresno County, CA (6.6%) and Madera County, CA (outside Fresno) (6.3%).
“With the U.S. housing market cooling off considerably since the middle of last year, some areas of the country continue to show signs of being more at risk of a larger downturn than others. That’s based on several key factors that can either boost or damage local housing markets, including unusually high home ownership costs, foreclosures, and relatively weak homeowner equity,” said Rob Barber, chief executive officer at ATTOM. “It remains important to note that we are not identifying markets headed for an imminent fall, just those that look to be more exposed to market troubles. Heading into the peak buying season of 2023, we will keep monitoring those areas closely to see if anything changes.”
The least vulnerable county in the housing market in the nation was Morgan County, AL, just outside Huntsville, where ownership costs were 22.6 % of the average local wages.