California and Florida Top New List of the Riskiest Housing Markets in the Nation

Following devastating wildfires and hurricanes, parts of California and Florida top a new list of the housing markets facing the biggest risk of a downturn in home values.

Of the 50 highest-risk markets, 14 were in California, seven in Florida, five in New Jersey, and four in Louisiana, according to the second quarter housing risk report from real estate analytics firm ATTOM.

The riskiest housing market in the nation is now Florida's Charlotte County, home to Punta Gorda on the Gulf Coast, the report found.

Risk was determined by a combination of affordability relative to local incomes, the proportion of seriously underwater mortgages, foreclosures, and county unemployment rates.

In 19% of the 579 counties with sufficient data to analyze, residents would have to spend a staggering 50% or more of their annual income to purchase and maintain the typical home.

In 63% of the counties, residents would have had to spend at least a third of their annual wages on home expenses, meeting the traditional definition of unaffordable.

The median sales price for existing homes set a new all-time high this summer, reaching $432,700 in June, according to the National Association of Realtors®.

Yet home transactions have slowed to a snail's pace as many buyers are priced out of the market, leading to questions about how much longer those lofty price ranges can be sustained.

“There’s uncertainty about how long prices can keep going up, and what will happen with the broader economy,” says ATTOM CEO Rob Barber. “That can be scary for owners and prospective buyers who don’t always get a full view of their market.”

Nationally, homebuyers on average could expect to spend 34% of their income on home expenses, the ATTOM report found.

But in some counties, housing costs were far higher and even exceeded what the typical worker could cover with 100% of their annual paycheck.

In Marin County, CA, home expenses consumed 120% of the typical resident’s annual wages, followed by Santa Cruz County, CA (116%); Maui County, HI (112%), and Kings County, NY (109%).

Nationally, just 2.7% of homes were considered seriously underwater, meaning the combined estimated balance of loans secured by the properties were at least 25% more than the properties’ estimated market values.

Louisiana showed an unusually high concentration of underwater properties, however, with rates above 10% in at least seven parishes.

Seven out of the 10 counties with the highest underwater rates were in Louisiana. The top five were Rapides Parish (17.3% of homes seriously underwater), Calcasieu Parish (16.9%), Caddo Parish (14.3%), Tangipahoa Parish (14.1%), and East Baton Rouge Parish (12.1%)—all in Louisiana.

The riskiest counties in the ATTOM analysis were characterized by a combination of relatively high foreclosure and unemployment rates.

In California, several of the counties at highest risk have been hit hard by wildfires in recent years. In Florida, hurricane risk and high insurance premiums have led to a downturn in home values in several major markets.

“This summer’s home prices were certainly eye-catching, but there are many factors that contribute to the health of a local housing market,” says Barber. “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.”

Meanwhile, the report names New York's Erie County, home of Buffalo, as the safest housing market in the nation.

Among the 50 least risky counties, those with the smallest share of wages needed to cover home costs were Chautauqua County, NY (17.8%); Potter County, TX (19.6%); Erie County, NY (22.6%); Madison County, AL (25.8%); and Olmsted County, MN (27.5%).