County Housing Markets Bearing the Brunt of Covid 19
The economic effects of Coronavirus on employment and businesses have left many out of work and unable to service debts including mortgages. Early studies have singled out Florida, Illinois and New Jersey as states where the real estate market is at highest risk with many home owners owing more than their homes are worth. One report by Data provider ATTOM says these counties are already showing signs of ‘distress’ which could point out to a bleak future even if the recovery was to be soon. Missed mortgage payments, bankruptcies and a prolonged economic downturn would only result in lower prices, foreclosures and weak demand in the high risk counties.
The housing market in New Jersey was struggling long before the current crisis began. The recent price rally witnessed in many markets was not much evident here according to Jeffrey Otteau, of the Matawan, New Jersey appraisal firm, Otteau Group. He says “they have very thin equity levels and negative equity even before layering the effects of Covid 19”. Other headwinds include high taxes and cost of living which has led to low population growth and high outbound migration. Not all New Jersey is in this downturn according to Angela Sicoli, president of the New Jersey Realtors. The counties of Somerset, Hudson and Morris which were performing well before the current crisis are still ranking above the rest. Overall and just like many other sectors, the housing market is reeling in low demand, low supply and low sales but the following counties have been could be hardest hit going by the current trends.
Ocean County, New Jersey- Located along Jersey shore, affordability of homes is of great concern with home buyers needing to dedicate an average of 45% of their income to afford a median priced home. Lost jobs and incomes are weighing highly on repayments and recovery prospects after Covid19 might prove even harder.
Gloucester County, New Jersey – Foreclosures are already at 0.3 % with the crisis just beginning. More than 27% of homeowners are behind on their repayments exacerbating the risk going forward.
Atlantic County, New Jersey – Being home to Atlantic City which heavily relies on tourism, the negative effects of Covid19 are heavy on every household and resident. Tourism is as good as dead and so are the jobs. The risk is very high and recovery bleak. Many might be staring at losing their homes in the near future.
Rockland County, New York- Homes are pricey in this County with median prices around $406,000. The New York metro area has been hardest hit and demand has decelerated as people consider investing away from the mega city.
Charles County, Maryland- Located south of Washington DC, houses are not cheap. A buyer needs to spend at least 43% of their salary to afford a median priced home Q1 of 2020. Few people might be ready for that in the next few months.
McHenry County, Illinois- Located northwest of Chicago, the housing situation was already bad coming into 2020. A huge number, 24% of homeowners were underwater by the end of 2019 and foreclosures were 0.2%. The state has witnessed low growth in the recent past with low jobs numbers and depressed home prices.
Flagler County, Florida – A typical home buyer needs to spend a hefty 47% of their income to afford a median priced home. This will in effect affect demand and keep prices depressed in the near term.