Cities on the Verge of a COVID-Driven Housing Crisis
As the continued spread of COVID-19 puts much of the U.S. economy at a standstill, many are wondering how the economic slowdown will affect the real estate market. While construction is considered an essential business in the majority of states and real estate agents have transitioned to online showings, housing markets nationwide are likely to struggle, and some appear to be far more vulnerable than others.
Areas where housing costs are high relative to income and where recent spikes in demand may have created local housing price bubbles may be at a greater risk of a COVID-19-driven crisis, as would areas that were already struggling prior to the coronavirus outbreak.
Using data provided by ATTOM Data Solutions, a real estate analytics company, 24/7 Wall St. constructed an index composed of the change in median home sales price over the past decade, housing affordability, unemployment, industry vulnerability to the impact of COVID-19, and other measures of housing market health to identify the cities on the verge of a COVID-19-driven housing crisis.
Many of the areas likely to be the hardest hit are those that were already at risk prior to the coronavirus pandemic. Factors such as the number of foreclosure filings, underwater mortgages, and distressed sales are good indicators of general housing market conditions and may become more important barometers in times of economic stress.
Housing markets with large shares of employment in sectors vulnerable to the current economic slowdown, such as oil and gas, tourism, and transportation, are also more likely to suffer during a COVID-19 recession. These are the places a COVID-19 recession will likely hit hardest.
Coronavirus has impacted different parts of the country to various degrees, and the cities with the highest number of COVID-19 cases span the country and vary in size. And because nearly all states are still undertesting for COVID-19, areas with more coronavirus cases per capita may have to take more precautions and continue to delay economic activity for longer, further handicapping the local housing market.