A recent report from real estate analytics firm ATTOM has identified Florida and California as the states with the riskiest housing markets in the first quarter of 2026. The analysis, which considered factors like unemployment, foreclosures, affordability, and underwater mortgages, places several counties within these states at the top of the vulnerability list.
Key Takeaways
- Florida and California lead the nation with the highest number of counties identified as high-risk housing markets.
- Elevated unemployment rates and increased foreclosure activity are primary drivers of housing market risk.
- Affordability remains a significant challenge across many U.S. housing markets, particularly in coastal California.
- Conversely, certain counties in Vermont, Tennessee, and Virginia are noted as the safest housing markets.
Identifying High-Risk Markets
ATTOM’s comprehensive analysis ranked 580 U.S. housing markets based on four key factors: the proportion of homes in foreclosure, the percentage of mortgages that are seriously underwater (owing at least 25% more than the home’s value), housing affordability relative to local incomes, and local unemployment rates. Of the 50 counties identified as most vulnerable, 12 are located in Florida and nine in California. Other states with a notable presence among the riskiest markets include Illinois and New Jersey, each with five counties.
Charlotte County, Florida, which includes Punta Gorda, was identified as the riskiest housing market in the nation. According to ATTOM CEO Rob Barber, the greatest risk is concentrated in areas where unemployment rates exceed 5% and foreclosure rates are elevated, even as home prices have stabilized from previous peaks.
Affordability Challenges Persist
Nationally, the report found that typical homebuyers spend approximately 30% of their income on homeownership expenses. However, this figure is substantially higher in certain regions. Four of the top five counties where housing costs consume the largest portion of a resident’s income are in California. In Kings County, New York, home expenses can account for over 108% of a typical resident’s annual wages, while Santa Cruz County, California, follows closely at 97.1%.
Underwater Mortgages and Foreclosure Hotspots
While only 3.2% of homes nationwide were considered seriously underwater, Louisiana stands out with eight of the top ten counties experiencing this issue. In terms of foreclosures, Liberty County, Texas, reported the highest rate, with one in every 55 homes in the foreclosure process. Other areas with high foreclosure rates include Baltimore City, Maryland, and Kaufman County, Texas.
Unemployment Rates
The national unemployment rate was reported at 4.4% in February. However, several counties, particularly those reliant on agriculture and tourism, face much higher jobless rates. Imperial County, California, recorded the highest unemployment rate at 17.6%, followed by Yuma County, Arizona, and Tulare County, California.
Safest Housing Markets
In contrast to the high-risk areas, Chittenden County, Vermont, was named the safest housing market in the nation. Other counties recognized for their low risk include Rutherford County, Tennessee; Arlington County, Virginia; Tippecanoe County, Indiana; and Cumberland County, Maine. These markets benefit from low unemployment, minimal foreclosure rates, and a lower incidence of underwater mortgages.
Sources
- Florida Remains the Riskiest Housing Market for Price Declines, Realtor.com.
- Florida, California counties top list of high-risk housing markets, HousingWire.
- Report: Florida and California Lead the Nation with Riskiest Housing Markets, Weekly Real Estate News.