3 CT Counties Among Most 'Vulnerable' Housing Markets: Report

CONNECTICUT — When much of the economy shut down because of COVID-19, the good times rolled for many home sellers in Connecticut. But the state's strong housing market could be heading toward a decline, according to a new report from real estate data curator ATTOM.

Three Connecticut counties rank among the top 100 most vulnerable housing markets based on factors such as home affordability, unemployment, local wages and the prevalence of foreclosures. (See where each Connecticut county ranked below.)

Home prices climbed more than 15 percent in most of the country over the past year, with new highs reached in about half the nation, according to ATTOM. But interest rates on 30-year mortgages have climbed to 6 percent, worsening affordability for prospective homebuyers. Home sales have declined every month in 2022, and home-price appreciation continues to show signs of retreating rapidly, according to the report.

"The housing market has been one of the strongest components of the U.S. economy since the onset of the COVID-19 pandemic," said Rick Sharga, ATTOM's executive vice president of market intelligence. "But Federal Reserve actions aimed at bringing inflation down from its 41-year high are having an immediate impact on home affordability, sales and pricing. Whether the Fed can execute a relatively soft landing, or inadvertently steers the economy into a recession, will determine the fate of the housing market over the next 12-18 months."

Here's how Connecticut counties rank in terms of vulnerability (lower number is worse), according to ATTOM's data:

• Windham: 37th
• Litchfield: 55th
• Tolland: 64th
• New London: 110th
• New Haven : 121st
• Fairfield: 130th
• Middlesex: 133th
• Hartford: 135th

Costs Outpace Wages

Major homeownership costs — such as mortgage payments, property taxes and insurance — consumed high percentages of local wages in the nation's most vulnerable counties.
ATTOM measured local wages against the expenses of median-priced, single-family homes in their respective areas for the first quarter of the year. These counties spent the largest percentage of wages:

1. San Joaquin County, California: 48.9 percent of average local wages needed for major homeownership costs
2. Bergen County, NJ: 48.3 percent
3. Solano County, California: 46.6 percent
4. Passaic County, NJ: 46.5 percent
5. Ocean County, NJ: 42.5 percent

Here is how Connecticut compares:

• Windham 29.0 percent
• Litchfield: 29.0 percent
• Tolland: 31.2 percent
• New London: 25.9 percent
• New Haven: 25.6 percent
• Fairfield: 26.8 percent
• Middlesex: 29.2 percent
• Hartford: 21.7 percent

Nationwide, the average was 26.3 percent of local wages.

Foreclosures
Nationwide, 1 in 1,795 homes faced a foreclosure action in the first quarter of 2022. Some Connecticut counties fared better, and some worse. Here is how Connecticut counties fared:

• Windham: One out of every 1,102 homes
• Litchfield: One out of every 1,537 homes
• Tolland: One out of every 1,602 homes
• New London: One out of every 2,363 homes
• New Haven: One out of every 2,040 homes
• Fairfield: One out of every 1,961 homes
• Middlesex: One out of every 1,907 homes
• Hartford: One out of every 1,767 homes

Least Vulnerable Markets
If you're looking for a more stable housing market, you're more likely to find one if you head South, according to ATTOM. The South had the highest concentration of markets least vulnerable to declines, the report says.

Twenty-six of the least vulnerable counties were in the South, while only five are in the Northeast, ATTOM says. Tennessee had eight of the 50 least at-risk counties, including five in Nashville's metropolitan area.

ATTOM included counties with "sufficient data" to analyze. Cape May and Salem counties — the state's least populous counties — were not included in the report.

Read ATTOM's full report here.

Additional reporting by Josh Bakan, Patch Staff