More than one-third of local wages are needed on average to meet housing payments in the U.S, a level well exceeding what is considered affordable, a report from real estate data provider Attom found.
A look at the markets at risk of a housing turndown in the country also determined five states accounted for a majority of the most vulnerable counties, Attom said.
Of the 50 counties considered most at risk in the fourth quarter, 30 were located in California, Florida, Illinois and the New York City metropolitan area, including suburban New Jersey. Attom analyzed county-level data from across the U.S., looking at the rate of underwater mortgages, foreclosures, unemployment rates and housing payments relative to wages.
Fourteen California counties located throughout the state landed on the list, while seven were scattered in Florida. Another five were found in the Chicago metropolitan area, while greater New York City added four counties to the list.
The acceleration of housing costs, which continued to set records last year even while moderating, points to home prices outpacing wage gains in much of the country, Attom noted.
While challenging levels of affordability have plagued homeowners in recent years, the company’s CEO cautioned that the data was fluid and not necessarily indicative of a pending crisis. The mortgage industry, though, should be on the lookout for any consistency in the data.
“Local housing markets fluctuate in and out of the lists of areas more or less exposed to declines from quarter to quarter, but some regions consistently rank among the most vulnerable due to significant gaps in key market indicators,” CEO Rob Barber said in a press release.
“This report isn’t meant to raise red flags or predict endless gains — it simply highlights counties experiencing more or less pressure that could influence home values, foreclosures or homeowner equity.”
The percentage of local wages needed to meet mortgage, property tax and insurance costs sat at what was considered seriously unaffordable levels in 28 out of the top 50 counties. Homeowners in those counties doled out at least 43% of earnings to meet expenses.
At the same time, the average national share of wages needed to pay for housing was 34%, still beyond the 28%-to-30% benchmarks commonly used as an affordability threshold.
While large urban areas concentrated on the coasts rank among the nation’s priciest markets, with many also experiencing the highest paces of home price growth this decade, the list of at-risk counties showed trouble spots across communities of different sizes.
Of the 14 California counties noted by Attom, several were located inland away from the coast in all parts of the state. Vulnerable markets near Chicago and New York also included suburban markets.
On the other side of the coin, counties less at risk to a housing market turndown were more likely to be found in the Midwest, Northeast or South. Of the 51 markets least likely to see a housing downturn, the list had Wisconsin on top with eight, followed by Tennessee and Pennsylvania, with six and five, respectively.
Attom’s report comes as the Federal Housing Finance Agency showed home prices rising again year over year to begin 2025, but monthly changes suggested minor softening. Similarly, the Mortgage Bankers Association found the payment amounts needed for new home loans in January climbing up to their highest since last spring.
Servicing indicators also point to increasing distress in some segments of mortgage borrowing, with foreclosure starts spiking 30% in January. Much of the uptick could be attributed to the end of a voluntary foreclosure ban meant to assist borrowers of Department of Veterans Administration-backed loans.
