Housing Markets Face Rising Risks as Affordability Woes Continue Across the U.S.

The latest Housing Risk Report from ATTOM paints a concerning picture for U.S. homeowners, showing that housing markets in certain areas are facing growing financial pressures. According to the report, which examined housing markets at the county level, many of the highest-risk areas are located in the South and West, with notable hot spots in California, Florida, and Louisiana. These regions are particularly vulnerable to housing affordability challenges, rising foreclosure rates, and the continuing threat of underwater mortgages.

The 50 counties with the highest risk were assessed based on several critical metrics: home affordability, equity levels, foreclosures, and local unemployment rates. As home prices continue to climb to record highs, affordability remains a critical issue for homeowners across the U.S. In fact, according to the report, 19% of counties require residents to spend at least half of their annual wages just to purchase and maintain a home. In nearly 63% of counties, the costs take up at least a third of annual wages.

Why Are These Counties Facing More Risk?

Rob Barber, CEO of ATTOM, highlighted that while the housing market’s high prices are grabbing attention, the real risk lies in local factors such as unemployment rates, foreclosures, and the amount of home equity residents have. Barber noted, “Our index takes into account key indicators beyond just sales price to create a barometer that helps folks better understand where their market is headed. There’s uncertainty about how long prices can keep going up, and what will happen with the broader economy.”

The counties deemed most at risk in this report include those with high foreclosure rates, large percentages of homes that are seriously underwater (where mortgage balances exceed home values by 25% or more), and local unemployment rates above the national average. California counties hit hard by wildfires in recent years, for example, have shown some of the highest levels of economic distress.

High-Risk Counties: What’s Driving the Strain?

Some of the highest-risk counties identified by ATTOM include:

• Charlotte County, Florida
• Humboldt County, California
• Shasta County, California
• Butte County, California
• Cumberland County, New Jersey

These areas face high unemployment rates and significant foreclosure activity, with at least one in every 766 homes in these counties in some form of foreclosure. For many of these counties, the combination of economic uncertainty, wildfire threats, and the ongoing effects of high mortgage rates have made it difficult for homeowners to gain equity or afford their housing costs.

The Growing Cost of Living

Nationwide, the cost of purchasing and maintaining a home has reached critical levels. In Q2 of 2025, the average homeowner spent approximately 33.7% of their annual wages on homeownership expenses a figure that is significantly above the 30% threshold typically considered affordable. However, in some counties, this burden is far more intense. In Marin County, California, for example, home expenses consume a staggering 119.7% of typical wages, making it one of the least affordable counties in the U.S. Other counties with similarly high figures include:

• Santa Cruz County, California: 116.1%
• Maui County, Hawaii: 111.5%
• Kings County, New York: 109%
• San Luis Obispo County, California: 99.3%

As these costs continue to rise, homebuyers especially first-time buyers are facing greater obstacles in entering the market.

Underwater Mortgages: A Hidden Threat

Nationwide, about 2.7% of homes were considered seriously underwater as of Q2 2025. These homes have mortgage balances at least 25% higher than their current market value. While this figure is modest overall, it reveals a stark disparity across counties. For example, Louisiana saw some of the highest rates of seriously underwater homes, particularly in:

• Rapides Parish, Louisiana (17.3% underwater)
• Calcasieu Parish, Louisiana (16.9% underwater)
• Caddo Parish, Louisiana (14.3% underwater)

With rising home prices and stagnant wage growth, homeowners in these regions are at an even higher risk of defaulting on their mortgages or facing foreclosure.

Foreclosures on the Rise

Another major factor contributing to housing risks is the increasing foreclosure rates. Nationwide, one in every 1,413 homes faced a foreclosure action during Q2 2025. However, certain counties are seeing even worse trends, such as:

• Dorchester County, South Carolina: One in every 355 homes facing foreclosure
• Charlotte County, Florida: One in every 372 homes
• Oswego County, New York: One in every 427 homes
• Kaufman County, Texas: One in every 467 homes
• Lake County, Indiana: One in every 488 homes

High foreclosure rates signal economic strain in the housing market, as homeowners in these areas struggle to meet mortgage payments amid rising housing costs.

The Southern and Western Regions: A Mixed Picture

The South has emerged as a key region in this report, with both high-risk and low-risk counties concentrated in this area. For example, counties in California and Florida were found to be at the highest risk, while the Northeast and Midwest showed more stability. In particular:

• California had 14 of the top 50 riskiest counties, with areas like Shasta and Humboldt facing severe pressures from both wildfires and economic downturns.
• Florida’s risky counties, like Charlotte County and Oswego County, were hit hard by rising foreclosure rates and higher home prices.

Meanwhile, some counties in the Midwest and Northeast, including places like Chautauqua County, New York (17.8% of wages), and Potter County, Texas (19.6% of wages), continue to offer affordable housing in comparison to the national averages.

Healthier Housing Markets: Stability Amid Rising Costs

While many areas face growing risks, some counties are faring better, particularly those with low foreclosure rates, low unemployment, and manageable housing costs. These counties include:

• Chittenden County, Vermont: 0.5% underwater homes, and 1 in 37,013 homes in foreclosure
• Orange County, North Carolina: 1 in 15,532 homes in foreclosure
• Gallatin County, Montana: 2.4% unemployment rate

These markets demonstrate that despite the broader affordability crisis, certain areas have remained relatively insulated from the worst effects of the housing downturn.

Conclusion: A Complex Housing Landscape

The Q2 2025 Housing Risk Report reveals a growing divide between housing markets, with the South and West taking the brunt of the impact in terms of high-risk factors like foreclosures, underwater mortgages, and unemployment rates. Meanwhile, counties in the Northeast and Midwest have shown relative stability, though rising housing costs continue to put pressure on homebuyers.

The combination of high prices, elevated mortgage rates, and local economic stress signals that many U.S. housing markets will remain vulnerable in the coming years. For homeowners and potential buyers, the risks remain high, but understanding these dynamics is crucial in navigating today’s complex housing market. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.