Some of the nation’s largest housing markets are the most vulnerable to a potential economic downturn.

The largest risks were in counties near New York City, Chicago, and Philadelphia, according to a recent report from real estate data firm ATTOM. The report was based on home prices, average local wages, the percentage of homes that could be foreclosed on, home affordability, the portion of underwater properties, local unemployment rates, and other factors in the second quarter of 2023.

“We continue to see pockets of the U.S. housing market where the foundation is a bit shakier—or more solid—than others,” ATTOM CEO Rob Barber said in a statement. “It doesn’t mean any one area or cluster of areas is about to crash. The overall market and the economy remain way too strong for imminent warnings to be sounded. But there are weak spots that are still popping up as areas to watch, especially if the market turns back downward.”

Which housing markets are the riskiest?

New Jersey and Illinois had the highest concentrations of at-risk housing markets. Together, 23 of the 50 most vulnerable counties were within the borders of the two states.

That doesn’t mean homeowners in these states should panic—or that buyers looking for cheap homes should get excited. Risky mortgages were largely eliminated in the wake of the Great Recession, so today’s homebuyers are less likely to default on their loans. And there are still more buyers in the market than there are homes for sale, despite today’s high home prices and mortgage rates.

Those factors are likely to keep most housing markets stable, even if they run into some turbulence.

Eight counties in the New York City metropolitan area were deemed more exposed to a downturn. The housing markets in Brooklyn and Staten Island as well as six suburban counties in New Jersey just outside of New York City were more precarious.

Chicago had six risky counties in its metropolitan area, Philadelphia had three, and California had six counties stretching throughout the state with two in the Sacramento metropolitan area.

In the riskier housing markets, more homeowners were underwater on their mortgages, a higher percentage of homes had received foreclosure notices, and the unemployment rate was generally higher than the national average.

Which housing markets are the safest?

On the flip side, the safest and most stable housing markets were located in the Southern region of the country as well as New England. Of the 51 least vulnerable counties, 18 were in the South, 17 were in the Northeast, 11 were in the Midwest, and five were in the West. (The West is also the nation’s priciest region for housing affordability.)

These markets generally had fewer homeowners who were underwater on their loans and were in danger of losing their homes to foreclosure. Unemployment was also lower in these areas, below 3% in 39 of these 51 counties.

Virginia had the honor of having the most stable markets with six counties deemed to be least at-risk. Five of those were in the Washington, DC, metro area.

Massachusetts had five, three of which were in the Boston metropolitan area. Tennessee, Montana, and New Hampshire all tied with four each. There were three in the Nashville metro and two in the Billings, MT, metro.

New Hampshire’s Manchester and Concord were also named some of the safest housing markets. That’s a boon for the New Hampshire markets, which have been at the top of the Realtor.com® hottest markets lists in recent months.

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