New Study Reveals the U.S. Housing Markets Most at Risk in 2025
A new Housing Risk Report from ATTOM highlights the U.S. counties most vulnerable to housing stress in the second quarter of 2025. Using affordability, equity levels, foreclosure activity, and unemployment rates as key measures, the study shows that risk varies sharply across the country with the South holding a significant number of high-risk markets.
Among the 50 counties flagged as most at risk, the largest clusters were in Louisiana, Florida, New Jersey, and California. Four Louisiana counties, seven in Florida, five in New Jersey, and fourteen across California ranked among the highest-risk markets heading into mid-2025.
The results come at a time when home prices are still near record highs. Even though mortgage rates, wages, and unemployment stayed mostly steady through June, the financial strain on many households grew. In nearly one-fifth of the 579 counties analyzed, buyers would need to spend half of their annual income just to buy and maintain a home. And in roughly 63% of counties, households would need to spend at least one-third of their yearly pay on housing costs.
Rob Barber, CEO of ATTOM, said the latest data shows that price trends alone cannot explain the health of a local market.
“Home prices tell one part of the story, but our index looks at the full picture to help people understand where their market may be heading,” Barber explained.
How ATTOM Measures Housing Risk
ATTOM’s risk model looks at several important factors:
- Share of homes facing foreclosure
- Share of mortgages considered seriously underwater
- Local affordability (wages needed to cover ownership costs)
- County-level unemployment
Counties that scored poorly in multiple categories showed the highest levels of vulnerability. Many of these markets also posted above-average unemployment and foreclosure activity conditions that amplify instability even when sales prices remain elevated.
The Five Riskiest Housing Markets in Q2 2025
ATTOM identified these counties as the most at risk:
- Charlotte County, FL
- Humboldt County, CA
- Shasta County, CA
- Butte County, CA
- Cumberland County, NJ
All five counties had unemployment levels higher than the national average of 4.36% in June and saw at least one foreclosure filing for every 766 homes. Several California counties on the list have also faced repeated wildfire impacts in recent years, adding another layer of instability.
Nationally, the typical homeowner spent 33.7% of annual income on mortgage payments and other ownership costs in Q2. But in some counties, the share skyrocketed past what a full-time earner could reasonably afford.
Regions With the Highest Cost Burdens
Homeownership costs consumed more than 100% of annual wages in several counties:
- Marin County, CA – 119.7%
- Santa Cruz County, CA – 116.1%
- Maui County, HI – 111.5%
- Kings County, NY – 109%
- San Luis Obispo County, CA – 99.3%
These figures show how extreme affordability challenges have become in parts of California, Hawaii, and New York.
Where Underwater Mortgages Are Most Common
Nationwide, 2.7% of properties were considered seriously underwater meaning loan balances exceeded market values by at least 25%. But in 223 counties, the rate was even higher. Louisiana dominated the list, holding seven of the 10 most underwater markets:
Top five:
- Rapides Parish, LA – 17.3%
- Calcasieu Parish, LA – 16.9%
- Caddo Parish, LA – 14.3%
- Tangipahoa Parish, LA – 14.1%
- East Baton Rouge Parish, LA – 12.1%
Counties With the Highest Foreclosure Rates
National foreclosure activity stood at one filing for every 1,413 homes. But these counties saw far higher rates:
- Dorchester County, SC – 1 in 355 homes
- Charlotte County, FL – 1 in 372
- Oswego County, NY – 1 in 427
- Kaufman County, TX – 1 in 467
- Lake County, IN – 1 in 488
High foreclosure levels combined with rising ownership costs make these markets especially vulnerable.
Counties With the Highest Unemployment Rates
About 35% of the counties studied had unemployment above the 4.4% national average. The highest rates were:
- Imperial County, CA – 19%
- Yuma County, AZ – 15.2%
- Tulare County, CA – 10.8%
- Merced County, CA – 10.5%
- Kings County, CA – 9.8%
These labor-market pressures often spill into local housing conditions, increasing risk over time.
Where Housing Markets Look the Strongest
The South and Northeast also featured many of the least risky markets. Eighteen counties in each region ranked in the “most stable” category. New York led all states with eight low-risk counties, followed by Wisconsin with seven, and both Tennessee and New Hampshire with four each.
Counties where homeownership required the smallest share of wages included:
- Chautauqua County, NY – 17.8%
- Potter County, TX – 19.6%
- Erie County, NY – 22.6%
- Madison County, AL – 25.8%
- Olmsted County, MN – 27.5%
These markets also had very low rates of underwater mortgages.
The counties with the lowest foreclosure activity were:
- Chittenden County, VT – 1 in 37,013 homes
- Orange County, NC – 1 in 15,532
- Yellowstone County, MT – 1 in 14,673
- Dane County, WI – 1 in 11,082
- Berkeley County, WV – 1 in 10,502
No county in the top-50 most stable markets had unemployment above the national average.
A Housing Market Split Across Regions
While national statistics may appear steady, local conditions tell a different story. In the South and West where many communities face elevated unemployment, underwater loans, and above-average foreclosure rates the housing market remains more sensitive to economic shifts. Florida and California continue to show the widest range of challenges.
Many counties in the Northeast and Midwest, on the other hand, showed greater resilience thanks to lower cost burdens, stronger job markets, and healthier levels of equity.
ATTOM’s Barber summed up the environment well:
“There’s uncertainty around how long prices can stay this high and what happens next with the broader economy. Buyers and homeowners don’t always see the full picture, and that can make local risks harder to judge.”
The data makes one thing clear: even as home prices set new records, the pressure on households is shaping a more uneven and fragile housing landscape across the U.S. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
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