The Most Vulnerable Housing Markets


Report reveals the most at-risk markets

It’s no secret that home values are a linchpin of reverse mortgage lending. Higher home values increase the likelihood that reverse mortgage applicants will qualify while falling home values typically result in more applications being deemed short-to-close and lower consumer interest.

In the first weeks of the COVID-19 pandemic, many began to suspect a housing crash was on the horizon. After all, the economy essentially came to a screeching halt with most office workers working remotely from home. That was the case until real estate professionals were deemed essential workers and the Federal Reserve repeatedly slashed interest rates triggering a historic runup in home prices. Mortgage professionals of all types breathed a sigh of relief and reaped the rewards of higher home values and record refinances. 

Today a nationwide housing crash is highly-doubtful yet several markets around the nation are beginning to show weaknesses that could lead to a housing downturn. 

Reverse mortgage professionals will want to see which housing metros they market in that may be at risk.

Real estate data aggregator and software provider ATTOM recently released its Special Housing Risk Report highlighting the most vulnerable housing markets. Their conclusions are drawn from fourth quarter 2023 foreclosure, affordability, and negative equity data. 

The Big Picture

California, New Jersey, and Illinois have the most at-risk markets in the country. Not surprisingly these are the states that have seen some of the largest gains in home prices. These three states account for 34 of the 50 counties most at risk of a significant decline in home values.

Housing markets near the coastline traditionally have the biggest surges of home values in a booming market and the largest risk of decline. However, 14 California inland counties far from the coast are showing signs of strain. 
Fault lines running through the foundation of the U.S. housing market continue to appear in different parts of the country, with some areas remaining more or less vulnerable than others,” said Rob Barber, CEO at ATTOM. “As always, this is not a warning sign for homeowners to run out and sell, or rush to buy, in any specific market. The housing market remains strong throughout most of the country despite some recent small downturns. Rather, this report again spotlights areas that appear more or less exposed to a market fall, should that start to happen, based on key measures.”

Key Performance Indicators


Those key performance indicators (KPIs) include the number of potential foreclosures, the number of homes underwater with mortgage balances that exceed the home’s estimated value, a disproportionate ratio of the local median household income when compared to the area’s median-priced single-family home, and a higher than average unemployment rate. 
ATTOM that 36 of the 50 most at-risk markets have five percent of traditional residential mortgages that were underwater (negative equity) in the fourth quarter of 2023. Nationwide, just over six percent of homeowners have a mortgage balance that exceeds their home’s value.
Nationally foreclosure rates remain relatively stable with just one in 1,503 homes in foreclosure. The highest concentration of foreclosures can be found in counties with a higher unemployment rate.  

Vulnerable Markets


The highest unemployment rates can be found in these central California agricultural counties
  • Tulare County, CA (10.2 percent)
  • Merced County, CA(8.5 percent) 
  • Kings County, CA (8 percent
  • Kern County (Bakersfield), CA (7.8 percent
  • Fresno County, CA (7.6 percent)
These are the 14 California counties at risk of a housing market decline/reset:
  • Butte County (Chico)
  • Sacramento County
  • El Dorado County
  • Solano County
  • Fresno County
  • Kern County (Bakersfield
  • Kings County (outside Fresno)
  • Madera County (outside Fresno)
  • Merced County (outside Fresno)
  • San Joaquin County (Stockton)
  • Stanislas County (Modesto)
  • Tulare County (outside Fresno)
  • Riverside County 
  • San Bernardino County

Additional Reading:



HECM loan application activity falls



HECM application activity falls


After a long delay the most recent FHA Single Family Production report was released earlier this month revealing November HECM application activity. 

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Few worried about a housing bubble- just like last time

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CNN Business: No one seems worried about a housing bubble. Just like last time the bubble burst

Good news. Few economists, if any, believe that the housing market will crash. The bad news most experts believed the same in the months and years leading up to the  2008 housing market crash.

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The Early Signs of a Housing Crisis?

Are we seeing the early signs of another mortgage crisis or housing bubble?

Perhaps you’ve noticed that housing prices are blowing up despite an uncertain economy and what appears to be a building second wave of COVID-19 infections. At this point, most of us are ready to accept some good news. However, there are some indicators that we are approaching a housing crisis while certainly, we have solid market indicators of improvement. As one Polish poet put it, “the truth usually is in the middle. Most often without a tombstone. Let’s dive in.

First, we will see a spike in evictions- not because landlords are booting out non-paying tenants, but because those property owners cannot pay the mortgage to the bank when they are no longer receiving rent payments. While this does not directly impact senior homeowners it will contribute toward increasing housing inventory which has a direct impact on housing prices. Next, let’s look at the state of the market comparing Black Knight’s July and August Mortgage Monitor reports.

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In its July report Black Knight’s stats who show serious mortgage delinquencies- that’s those who are 90 days past due or longer- jumped 20 percent in July for a total of 1.8 million more delinquencies before the pandemic. However, the overall delinquency rate fell by nearly 9%.

Now, this is where our viewers serving some of our nation’s largest metros will want to pay attention. Here are the ten cities that had the largest increase in delinquencies in July. Florida holds three spots with Miami, Tampa, and Orlando. It’s not surprising to see New York and New Jersey on the list as two of the areas hardest-hit by COVID-19. Cities with the highest delinquencies will see more future foreclosures which naturally increases inventory and lowers prices. The markets with the largest delinquency increases are most likely those where state or local officials have enacted strict shut-down measures shuttering small businesses and spiking unemployment rates. However, keep in mind if we do see a reset in home values it historically has begun in larger metros and then trickles down to smaller communities.

Now on to some positive signs of improvement. The rate of serious delinquencies slowed from July’s 20 percent to only 5 percent growth in August. As the U.S. GDP jumped nearly 33% in the third quarter this year and unemployment rates continue to drop many hope that requests for forbearance plans continue to dwindle after their spike earlier this spring. Outside of historically-low interest rates, the continued lack of housing inventory is sustaining current housing prices. Mortgage delinquencies 100-113% higher than last year as millions found themselves unable to earn an income while sheltering in place, The good news is that many of these individuals are going back to work as evidenced by 41% of those were in a COVID-19 forbearance plan have resumed making their monthly payment.

While these are positive signs of a partial recovery uncertainty remains our biggest challenge. Black Knight Data & Analytics President Ben Graboske explained, “At the current rate of improvement, delinquencies would remain above pre-pandemic levels until March 2022. What’s more, when the first wave of COVID-19-related forbearance plans reach their 12-month expiration period, we would still have a million excess delinquencies.”

In conclusion, what we have is a mixed bag. What could be a looming housing crisis, positive economic indicators, millions resuming their mortgage payments, and of course a red-hot housing market? Our best approach is a stoic one- don’t overindulge in dire predictions, watch key market indicators closely, and consider adjusting your marketing efforts outside larger metros should housing trends turn sour in urban markets.

Resources mentioned in this episode: