Real Estate Report #302: Which counties Have The Latest YoY, Changes of Your Local RE High Risk Findings, Plus, Top Key Highest Risk Local RE Market Activities?
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Real Estate Report #302: Which counties Have The Latest YoY, Changes of Your Local RE High Risk Findings, Plus, Top Key Highest Risk Market Activities?
California and New Jersey Locales Top Counties Facing Greatest Housing Market Headwinds
Southern counties, led by regions of Tennessee and Virginia, show greatest signs of strength; Home affordability is a challenge almost everywhere, while foreclosures, mortgage health, and unemployment rates vary widely
The latest Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, equity and other measures in the first quarter of 2025. The report shows that California and New Jersey had high concentrations of counties considered most at-risk.
The data shows that 23 of the 50 most at-risk markets were in California (14) and New Jersey (9). Risk was determined by affordability, proportion of seriously underwater mortgages, foreclosures, and unemployment rates.
In a sign of the robust post-pandemic housing market, the number of foreclosures and proportion of homes with seriously underwater mortgages—meaning the combined estimated balance of loans secured by the property was at least 25 percent more than the property’s estimated market value—remained low throughout much of the country during the first quarter of the year. But that stability, combined with several years of aggressive buying, has contributed to escalating prices that make it increasingly hard to purchase a new home in some markets.
In 109 of the counties analyzed, a typical resident would have to spend more than half of their annual income to cover the down payment, mortgage, and other initial expenses for a median-priced home.
This report highlights a number of market forces that anyone with an interest in their local housing market should keep an eye on . Affordability is an obvious concern, but as the data shows, there’s a complex interplay between price, wages, mortgage health, and foreclosure rates that can give even greater insight into where property values are likely to go in the future.
There’s no unequivocal metric that can tell you where it’s safe to buy and where it’s risky. But taken together these data points show how different parts of the country are performing.
Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with seriously underwater mortgages, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes, and local unemployment rates.
The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared.
Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 572 counties around the United States with sufficient data to analyze in the first quarter of 2025. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks. See below for the full methodology.
As the summer buying season kicks into full gear amid uncertainty about how tariffs and federal legislation will affect the broader economy, the analysis provides a touchstone for potential homebuyers and real estate investors seeking to understand the health of their local market.
California had 14 of the top 50 riskiest counties
The three most at-risk counties in the analysis—Butte, Humboldt, and Shasta counties—cover regions of Northern California that, in addition to contending with challenging market forces, have been ravaged by wildfires in recent years. Rounding out the top five most at-risk counties were New Jersey’s Atlantic and Cumberland counties along the state’s southern coast.
In previous years, counties surrounding New York City, NY have scored among the riskiest in the nation. But that wasn’t the case in the first quarter of 2025. No New York counties landed among the 50 riskiest markets, and although nine New Jersey counties did, they were largely in the central and southern part of the state.
Poor affordability and mortgage health characterize the riskiest markets
Nationwide, the typical purchaser had to spend just under a third of their annual wage (32.5 percent) to afford down payment, mortgage, and other expenses for a median-priced home in the first quarter of 2025. But that affordability measure varied widely by region. Housing expenses as a share of income exceeded the national rate in 59.3 percent (339) of the 572 counties in the analysis.
In Kings County, NY, initial expenses for a median-priced home consumed 109.5 percent of a typical resident’s annual salary. That was followed by Maui County, HI (101.5 percent or the region’s typical annual salary); San Luis Obispo County, CA (100.1 percent of a typical salary); Orange County, CA (97.8 percent of a typical salary); and Marin County, CA (97.5 percent of a typical salary).
Across the country, 2.8 percent of properties had mortgages considered seriously underwater but 37.8 percent (216) of the 572 counties we examined exceeded that rate and a handful of Louisiana parishes posted double-digit rates of seriously underwater homes.
Calcasieu Parish, LA had the highest rate of seriously underwater properties (14 percent), followed by East Baton Rouge Parish, LA (13.7 percent); Caddo Parish (13.4 percent); Rapides Parish, LA (13.1 percent); and Ouachita Parish, LA (12.8 percent).
More than one of every 1,000 properties faced a foreclosure action in the first quarter of 2025 in 19.2 percent (110) of the 572 counties. Nationwide, one in every 1,515 homes faced foreclosure. The counties with the worst foreclosure rates were Dorchester County, SC (one in every 434 homes); Johnson County, TX (one in every 463 homes); Highlands County, FL (one in every 472 homes); Cumberland County, NJ (one in every 473 homes); and Kaufman County, TX (one in every 517 homes).
The national unemployment rate in March 2025 was 4.3 percent, but once again there was significant regional variation. About a third of the 572 counties had higher unemployment rates, led by Imperial County, CA (16.6 percent unemployment); Tulare County, CA (11.4 percent); Merced County, CA (11.3 percent); Yuma County, AZ (11.1 percent); and Kings County, CA (10 percent).
South leads the way with least risky counties
More than half (27) of the 50 least at-risk counties in the analysis were located in Southern states, followed by 12 from Midwestern states and seven from states in the Northeast. Tennessee led the way with nine counties: Sullivan, Hamilton, Washington, Blount, Sumner, Davidson, Wilson, Knox, and Rutherford.
Virginia posted seven counties among the 50 most favorable: Henrico, Prince William, Alexandria City, Arlington, Virginia Beach City, Loudoun, and Fairfax. And Wisconsin had four: Outagamie, Winnebago, Brown, and La Crosse.
In addition to Fairfax County, VA, which is in the Washington, D.C. suburbs, several other major metro areas also scored in the top 50. They included Honolulu County, HI; Hennepin County, MN (which encapsulates Minneapolis and St. Paul); and Wake County, NC (which covers Raleigh).
Foreclosure and unemployment rates strong indicators of county housing market strength
The counties that scored in the top 50 least risky tended to be more affordable for prospective buyers than those at the other end of the spectrum, but not by a large margin. A typical resident had to spend less than a third of their annual income to purchase and pay for a new home in 38 percent (19) of the top 50 counties compared to 30 percent (15) of the 50 most risky counties.
Among the 50 most favorable counties, the ones with the lowest portion of wages required for home ownership were Madison County, AL (21.4 percent); Sullivan County, TN (21.6 percent); Morgan County, AL (23.3 percent); Midland County, TX (25.6 percent); and Durham County, NC (26.4 percent).
Of those top 50 least at risk counties, 44 counties were beating the national rate of 2.8 percent of homes with seriously underwater mortgages. The top counties with the lowest rate of seriously underwater homes were Loudoun County, VA (0.5 percent); Prince William County, VA (0.7 percent); Fairfax County, VA (0.9 percent); Maui County, HI (0.9 percent); and Saratoga County, NY (1 percent).
Only one of the 50 least risky counties had a foreclosure filing rate greater than the national average of one in every 1,515 homes (in Shelby County, AL, one in every 1,465 homes faced possible foreclosure in the first quarter of 2025). Among the top 50 counties, the best foreclosure rates were in Arlington County, VA (one in every 17,249 homes); Gallatin County, MT (one in every 11,118 homes); Medina County, OH (one in every 10,815 homes); La Crosse County, WI (one in every 7,605 homes); and Berkeley County, WV (one in every 7,502 homes).
Across the board, the 50 least risky counties had unemployment rates below the national rate of 4.3 percent. The best rates were in Minnehaha County, SD (1.9 percent); Gallatin County, MT (2.2 percent); Honolulu County, HI (2.3 percent); Rutherford County, TN (2.6 percent); and Hamilton County, IN (2.6 percent).
