California has 6 of 10 ‘most vulnerable’ housing markets in US
California's high-risk counties are less-populated regions to the north.
The “Looking Glass” ponders economic and real estate trends through two distinct lenses: the optimist’s “glass half-full” and the pessimist’s “glass half-empty.”
Buzz: California has six of the 10 counties nationwide with the highest risks of home-price declines.
The source: My trusty spreadsheet looked at Attom’s study of housing markets “most vulnerable” to price declines based on first-quarter economic measurements such as affordability, underwater mortgages – loans larger than home values – loans in the foreclosure process, and unemployment rates.
Debate: Where are California’s shakiest home prices?
Glass half-empty
California’s high-risk counties are less-populated regions to the north. Their prices may have been pushed out of economic balance by remote workers seeking cheaper homes to live in away from the Bay Area job hubs.
San Joaquin County was the nation’s riskiest of these 590 tracked by this math, with local house hunters needing 58% of local incomes to buy the $505,000 median-priced home. The county has 6.7% of mortgages underwater, 0.11% homes in the foreclosure process, and 7.2% unemployment. The other five high-risk markets from California:
No. 2 Merced: 49% income to buy $378,000, 6.5% underwater, 0.14% foreclosure, 11.6% unemployment.
No. 4 Madera: 53% income to buy $415,000 6% underwater, 0.13% homes foreclosure, 9% unemployment.
No. 5 Butte: 43% income to buy $340,000, 8.3% underwater, 0.12% foreclosure, 6.4% unemployment.
No. 9 Kings: 40% income to buy $310,000, 8.6% underwater, 0.1% homes foreclosure, 10.1% unemployment.
No. 10 Solano: 56% income to buy $553,000, 6.3% underwater mortgages, 0.1% homes in foreclosure, 5.3% unemployment.
Glass half-full
The good news is that the state’s lower-risk counties are some of the biggest housing markets.
Santa Clara County ranked No. 363 of the 590, the state’s best grade, with 57% of local incomes needed to buy the $1.45 million median home, 1.6% of loans underwater, 0.03% of homes in foreclosure, and 4.1% unemployment.
Second-lowest risk was No. 359 Imperial County – 43% income to buy a $331,000 home, 3.3% underwater, 0.01% foreclosure, 16.4% unemployment.
Other low-risk counties …
No. 307 Marin: 103% income to buy $1.35 million home, 3.4% underwater, 0.04% foreclosure, 3.7% unemployment.
No. 297 Orange: 95% income to buy $1.1 million home, 1.7% underwater, 0.05% foreclosure, 3.9% unemployment.
No. 269 Santa Cruz: with 97% income to buy a $945,000 home, 2.8% underwater, 0.01% foreclosure, 7.5% unemployment.
No. 267 San Diego: 71% of income to buy a $840,000 home, 2% underwater mortgages, 0.04% homes in foreclosure, 4.4% unemployment.
Bottom Line
California housing looks riskier than the nation as a whole when you compare the state’s 35 counties in the study vs. the 555 counties elsewhere, based on median results …
Risk ranking: California’s median county risk was a No. 70 rank vs. 310 for the rest of the nation.
Income to buy: Far more is needed in California – 60% vs. 35% elsewhere.
Underwater mortgages: Fewer troubles in California – 4.3% vs. 6.1% elsewhere.
Homes in foreclosure: Essentially the same around 0.065%.
Unemployment: Higher in California, 5.1% vs. 3.6% elsewhere.
Quotable
“This is not to suggest that any one market is facing imminent decline. It’s more a measure of vulnerability gaps,” says Attom CEO Rob Barber. “But with the housing market slowing down over the past year, some metro areas appear notably better positioned than others to withstand a scenario of the market topping out and heading downward.”
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com