Introduction to Housing Market Risks
The second quarter of 2025 has seen a significant number of counties in the United States facing housing market risks. According to ATTOM’s latest Housing Risk Report, California is home to the most counties with at-risk housing markets. This finding points to a broader trend of financial strain impacting homeowners across the nation. However, the picture is far from uniform, and it’s crucial to understand that not all of California’s counties are equally vulnerable.
What Makes a Housing Market "At-Risk"?
ATTOM’s analysis zeroes in on four key indicators to determine a county’s housing market risk level:
- Home Affordability: This refers to how much of a person’s annual income is needed to set aside for mortgage payments, property taxes, insurance, and other homeownership costs.
- Seriously Underwater Mortgages: This refers to homeowners who owe at least 25% more on their mortgage than their home is currently worth.
- Foreclosure Rates: A higher percentage of homes facing foreclosure signals that people are struggling to keep up with their mortgage payments.
- County Unemployment Rates: When people are out of work, they can’t pay their bills, including their mortgages.
California: The Top of the List
California has 14 counties identified as being among the riskiest. This high number reflects the persistent challenge of affordability that many Californians face. For example, in Marin County, CA, home expenses consumed a staggering 119.7% of the typical resident’s annual wages. Similarly, Santa Cruz County, CA, saw expenses eating up 116.1% of wages, and San Luis Obispo County, CA, at 99.3%. These numbers are eye-opening and imply that in these areas, people are dedicating their entire income to housing and might be falling short.
Other Hotspots and Unexpected Trends
While California is prominent, ATTOM’s report shows that challenges are widespread, and the South is also significantly represented among the riskiest markets. Fourteen of the 50 highest-risk markets are found in California, but Florida isn’t far behind with seven counties, and New Jersey shows five. This tells us that economic pressures affecting housing are not confined to one region. Louisiana stands out for its high rates of seriously underwater mortgages, with seven out of the ten counties with the highest underwater rates being in Louisiana.
The Safest Markets
The report also highlights counties that are doing well, which can offer clues about what creates stability. The South and Northeast have the most counties listed as the least risky. Counties like Chittenden County, VT, and Washington County, RI, show incredibly low rates of seriously underwater homes and very strong foreclosure rates. Their unemployment rates are also remarkably low. These areas seem to have a good balance of stable employment, affordable housing relative to income, and homeowners who are generally in strong financial positions.
Unpacking the Data
As we review this data, a few things stand out. The combination of high home prices and relatively stagnant wage growth is creating a perfect storm for affordability issues. This isn’t just a California problem; it’s a national conversation. The diversity of risk factors across different regions is fascinating, with Louisiana’s underwater mortgage issue being different from California’s affordability crisis, yet both point to market vulnerabilities. Unemployment remains a critical bellwether, and a strong job market is the bedrock of a healthy housing market.
Conclusion
Ultimately, while California leads with the most at-risk housing market counties, it’s a summary that needs further unpacking. The devil is in the details, and understanding the varying economic conditions and local dynamics within California and across the nation is key to grasping the full picture of housing market health in the second quarter of 2025. The report’s methodology, combining affordability, equity, foreclosures, and unemployment, provides a comprehensive look at where homeowners might be struggling. As we move forward, it’s essential to consider these factors and how they impact the housing market’s overall health.
