The Major Metros at Risk of a Slump Due to Foreclosures and Unemployment

New York City, Chicago, and Washington, DC, are among the biggest markets facing the highest risk of a housing downturn due to a range of economic factors, a new study shows.

The latest Special Housing Risk Report from ATTOM Data Solutions, a curator of land, property data, and real estate analytics, reveals that two-thirds of the 50 counties deemed most vulnerable to possible housing market declines based on an array of factors, including gaps in affordability and equity, were clustered in California, Illinois, Florida, and the New York City region in the fourth quarter of 2024. 

Other economic factors could include foreclosures, underwater mortgages, and unemployment.

And while many counties in the South were assessed to be low-risk markets, Washington, DC, stood out for being one of the most vulnerable in that region at the end of last year. 

Notably, the data used in ATTOM’s report predates the mass firings of federal workers that the Elon Musk–helmed U.S. Department of Government Efficiency, or DOGE, has been carrying out since the end of January.

“Local housing markets fluctuate in and out of the lists of areas more or less exposed to declines from quarter to quarter, but some regions consistently rank among the most vulnerable due to significant gaps in key market indicators,” stated ATTOM CEO Rob Barber.

Barber noted, however, that “this report isn’t meant to raise red flags or predict endless gains. It simply highlights counties experiencing more or less pressure that could influence home values, foreclosures, or homeowner equity.”   

Where are the most at-risk housing markets?

ATTOM’s latest report shows that of the 566 counties around the U.S. that had sufficient data from November 2024 to analyze, 50 were found to be the most slump-prone; of those, five counties were in and around Chicago, four in or near New York City, 14 in California, and seven in Florida. The rest were scattered around parts of the Northeast, Midwest, and South.

Counties were deemed more or less vulnerable based on several factors, including the share of homes in an area facing possible foreclosure; the portion with underwater mortgages, meaning that a homeowner owes more on their mortgage than their house is worth; the percentage of average local wages required to pay for major homeownership expenses on median-priced homes; and local unemployment rates.

In New York, Kings County, which covers Brooklyn, and Richmond County, which covers Staten Island, were revealed as the most vulnerable areas based on market metrics. 

In neighboring New Jersey, Essex and Passaic counties topped the list of most at-risk areas. 

Down the East Coast, Washington, DC, Charles County, and Prince George’s County in Maryland distinguished themselves for being the most ill-protected from a downturn.  

Farther down South in Florida, housing markets in Charlotte, Hernando, Lake, Marion, Pasco, Polk, and St. Lucie counties were determined to be the most endangered. 

In the Midwest, the areas most exposed to risk in Illinois included Cook County, which covers Chicago, the nation’s third most populous city (with 2.66 million people), as well Kane, Kendall, McHenry, and Will counties. 

Looking westward, 14 of California’s 58 counties earned the dubious honor of being named the most at-risk, including Butte, Contra Costa, El Dorado, Riverside, and San Bernardino.

High foreclosure rates and unaffordability put counties at risk

A home is generally considered affordable if its owner spends less than 30% of their income on it monthly, according to Realtor.com® economists.

In 28 of the 50 U.S. counties deemed most vulnerable to housing market slumps in the fourth quarter, homeownership expenses, including mortgage payments, property taxes, and home insurance, consumed at least 43% of average local wages, according to ATTOM.

Brooklyn, NY, emerged as by far the most unaffordable area, with a staggering 106.5% of average income going toward housing costs, followed by Riverside County, CA (70.4%), Passaic County, NJ (69.4%), and Staten Island, NY (67.6%).   

During the same period, 29 of the 50 most at-risk counties had more than 6% of mortgages underwater, with Pasco County, FL, outside Tampa, leading with 15.8%. Baltimore and New Orleans rounded out the top three areas with the highest shares of underwater mortgages, at 15.3% each. 

Looking at foreclosure figures, more than 1 in every 1,000 properties faced a foreclosure in 37 of the vulnerable counties. Charlotte County, FL, had the highest rate in the group, with 1 in 198 homes facing possible foreclosure, followed by Cumberland County, NJ (1 in 484), and Kaufman County, TX (1 in 562). 

When considering unemployment numbers in November 2024, five California counties had the highest rates of the 50 most at-risk areas, with Kern and Kings counties topping the list with 7.9% each, followed by Fresno County (7.8%), Madera County (7.3%), and Stanislaus County (6.7%).   

Least at-risk counties spread across South, Midwest, Northeast

Of the 566 counties studied by ATTOM, 51 ranked as the least vulnerable to housing market woes. Among those, 23 counties were in the South, 13 each were in the Midwest and Northeast, and a further two were in the West, according to the report. 

Wisconsin boasted the most counties facing the least risk, at eight. Those included Brown County, which covers Green Bay, as well as Dane and Winnebago counties, which encompass Madison and Oshkosh, respectively. 

Tennessee ranked second on the list, with six least at-risk counties, half of them in the Nashville metro area. 

In Pennsylvania, homeowners living in Cumberland, Dauphin, Erie, Lebanon, and Lehigh counties were least exposed to the vagaries of the housing market. 

So what sets those 51 least risk-averse counties apart from their more endangered counterparts?

According to ATTOM researchers, the least vulnerable areas saw more affordable homeownership costs, fewer underwater mortgages, a lower share of foreclosed homes, and unemployment rates below the national level. 

For example, a typical homeowner in Monongalia County, WV, spent the smallest share of their wages on homeownership expenses, at just 23.8%, well below the 30% affordability benchmark. 

Meanwhile, in 49 least at-risk counties, less than 6% of mortgages were underwater, with Chittenden County, VT, seeing the lowest share, at only 0.9%. 

Vermont’s most populous county, which is home to Burlington, incidentally also had the second-lowest foreclosure rate, just behind Cumberland County, PA, where 1 in 36,385 properties faced possible foreclosure.

“Risk disparities remain in place across the U.S. amid market forces that could combine to cool off the nation’s housing market boom onward or spur it ever higher,” concluded the ATTOM analysis.