{"id":187433,"date":"2026-04-06T12:23:09","date_gmt":"2026-04-06T18:23:09","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=187433"},"modified":"2026-04-06T12:23:12","modified_gmt":"2026-04-06T18:23:12","slug":"riskiest-housing-markets","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/riskiest-housing-markets","title":{"rendered":"Want to Avoid a Bad Investment? These Housing Markets Carry the Biggest Risks"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">While real estate <\/span><span data-preserver-spaces=\"true\">is often described<\/span><span data-preserver-spaces=\"true\"> as the best way to build wealth, it can also be one of the fastest ways to lose it. Making a good investment often comes down to location. Choose well and ride the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-home-equity\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">equity<\/span><\/a><span data-preserver-spaces=\"true\"> wave to financial freedom. A poor choice, conversely, can leave you in a money pit.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Today\u2019s investment decisions involve more than employment, crime, and future development. <\/span><span data-preserver-spaces=\"true\">Insurance shocks, climate risk, and utility costs can erode net income and <\/span><span data-preserver-spaces=\"true\">the<\/span><span data-preserver-spaces=\"true\"> potential <\/span><span data-preserver-spaces=\"true\">for <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-appreciation-in-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">appreciation<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> Aggregating county-level data from researchers such as ATTOM and the First Street Foundation highlights counties where seemingly attractive investments may conceal significant risks.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">According to<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/market-trends\/home-sales-prices\/2025-year-end-housing-impact-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> ATTOM<\/span><\/a><span data-preserver-spaces=\"true\">&#8216;s analysis of 594 U.S. counties, particularly vulnerable counties are diverging from the usual <\/span><span data-preserver-spaces=\"true\">boom and bust<\/span><span data-preserver-spaces=\"true\"> suspects. The analysis took into account four risk factors:\u00a0<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Foreclosure activity<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Unemployment rates<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Home affordability<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Share of underwater properties (mortgage balances at least 25% above market)<\/span><\/li>\n<\/ul>\n<h2><span data-preserver-spaces=\"true\">California Has Some Perilous Counties<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The riskiest market with a population over 1 million is Riverside County, California, with 2.4 million residents. It ranks 29th out of all the markets analyzed nationally. Here, buyers spend nearly 66% of their average local wage on homebuying costs. With a Q4 median home price of about<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.zillow.com\/home-values\/2832\/riverside-county-ca\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> $600,000<\/span><\/a><span data-preserver-spaces=\"true\">, it\u2019s almost twice the national median. Foreclosure filings were filed on one out of 811 properties, twice the national rate.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Nationally, a typical homeowner spends just under<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nytimes.com\/2025\/10\/23\/realestate\/are-you-paying-more-than-30-of-income-on-housing-costs.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> one-third<\/span><\/a><span data-preserver-spaces=\"true\"> of their yearly income on homebuying costs, and<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.prnewswire.com\/news-releases\/us-foreclosure-activity-increases-in-2025-302662322.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> 1 out of every 1,274 homes<\/span><\/a><span data-preserver-spaces=\"true\"> is in the foreclosure process as of the fourth quarter of 2025. Around 65.7% of the 364 counties analyzed by ATTOM in its<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/market-trends\/home-sales-prices\/2026-rental-affordability-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> January 2026 Affordability report<\/span><\/a><span data-preserver-spaces=\"true\"> required more than one-third of a buyer\u2019s salary to buy a home.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The takeaway here for investors is clear: If you can\u2019t afford to invest in an expensive market with ease, don\u2019t bother. Taking on debt and high leverage, despite appreciating home prices and prestige homes, will land you in a world of trouble. It\u2019s just not worth it.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">San Bernardino (<\/span><span data-preserver-spaces=\"true\">fourth riskiest<\/span><span data-preserver-spaces=\"true\"> large county, 49th overall) is also unstable, with one in every 777 properties receiving foreclosure filings and buyers spending over 54% of their wages on <\/span><span data-preserver-spaces=\"true\">home<\/span><span data-preserver-spaces=\"true\"> costs.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Other California counties in jeopardy include Fresno and Contra Costa, which have high unemployment rates.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">\u201cAffordable\u201d Cities Come Stacked With Risk<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Compared to West Coast counties, Philadelphia County is relatively affordable, but a shocking 8% of owners there are underwater on their mortgages, with a foreclosure rate triple the national average.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Philly is known as being an investor-heavy city. As of 2023, large corporate investors owned 8.8% of single-family rentals, and in specific distressed neighborhoods, investor-purchased homes accounted for 20% of sales, according to the<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.philadelphiafed.org\/community-development\/housing-and-neighborhoods\/ownership-profile-of-single-family-residence-properties-in-philadelphia-large-corporate-investors#:~:text=The%20*Ownership%20Profile%20of%20Single-Family%20Residence%20Properties,high%20as%20in%20some%20real%20estate%20markets.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Philadelphia Federal Reserve Bank<\/span><\/a><span data-preserver-spaces=\"true\">. The heavy investor presence has<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.inquirer.com\/real-estate\/housing\/investor-real-estate-rental-homeowner-philadelphia-drexel-reinvestment-fund-20221013.html#:~:text=In%20these%20cities&#039;%20most%20distressed%20neighborhoods%20--,the%20Nowak%20Metro%20Finance%20Lab%20at%20Drexel.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> squeezed out owner-occupants<\/span><\/a><span data-preserver-spaces=\"true\">. The homeownership rate<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.philadelphiafed.org\/community-development\/housing-and-neighborhoods\/affordability-challenges-and-barriers-to-homeownership-in-philadelphia#:~:text=Philadelphia&#039;s%20homeownership%20rate%20fell%20from,households%20are%20at%2057.4%20percent.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> fell from 57.5% to 52.4%<\/span><\/a><span data-preserver-spaces=\"true\"> between 2005 and 2023.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It\u2019s a classic red flag for investors. Would-be landlords from nearby New York and New Jersey flooded the city, lured by the prospect of cheap housing and decent rents, giving scant regard to employment or the large number of investor-owned properties, which destabilized the neighborhood&#8217;s character. When the labor-intensive travails of managing these properties\u2014chasing up rents, evicting tenants, performing repairs\u2014became too much and their <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash flow<\/span><\/a><span data-preserver-spaces=\"true\"> projections went up in smoke, they let the properties fall into foreclosure, killing their own credit and further undermining the neighborhood.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Louisiana Leads Southern Poor Performers<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Seven of the 10 counties with the highest underwater rates were in Louisiana, according to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/market-trends\/home-sales-prices\/q2-2025-housing-impact-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">ATTOM\u2019s Q2 2025 data<\/span><\/a><span data-preserver-spaces=\"true\">, led by Rapides Parish, where 17.3% of the homes <\/span><span data-preserver-spaces=\"true\">were owned<\/span><span data-preserver-spaces=\"true\"> far more than the property was worth. Other Southern bad performers were Dorchester County, South Carolina; Charlotte County, Florida; and Kaufman County, Texas.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Florida <\/span><span data-preserver-spaces=\"true\">Is Filled<\/span><span data-preserver-spaces=\"true\"> With Investment Landmines<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Florida is sliding into \u201cno-go\u201d terrain for entirely different reasons: <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/finance.yahoo.com\/news\/florida-most-counties-risk-falling-115900847.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">16 of the 50 U.S. counties <\/span><\/a><span data-preserver-spaces=\"true\">most at risk of falling home prices are located there, more than in any other state. Its riskiest markets are Charlotte County on the Gulf Coast and St. Lucie County.<\/span><\/p>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/news\/trends\/florida-home-prices-falling-attom\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Realtor.com<\/span><\/a><span data-preserver-spaces=\"true\"> senior economist Joel Berner, commenting on the findings, said, \u201cMany Florida homeowners unknowingly bought at the peak of the market following the intense run-up in prices of 2021 and 2022 and are now in danger of seeing their home value decrease as the market continues to soften.&#8221;<\/span><\/p>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/most-recent\/foreclosure-rates-by-state\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">ATTOM\u2019s 2026 foreclosure report ranks<\/span><\/a><span data-preserver-spaces=\"true\"> the state among the top five for foreclosure rates (No. 1 is Indiana), with over 4,500 properties in foreclosure as of February, indicating significant market stress for investors. Unlike many other regions, much of Florida\u2019s risk comes from increased insurance costs and climate events, both of which can drive up expenses and diminish investment returns or home values.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">First Street Foundations&#8217; 12th annual<\/span> <span data-preserver-spaces=\"true\">\u201c<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/assets.riskfactor.com\/media\/The%2012th%20National%20Risk%20Assessment.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Property Prices in Peril<\/span><\/a><span data-preserver-spaces=\"true\">\u201d report predicts that Florida and Texas will experience the largest property value declines in the country, mentioning Broward, Duval, Miami-Dade, Pasco, Hillsborough, Palm Beach, and other pricey enclaves as being particularly susceptible to climate-related price drops, as insurance costs are driven higher.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cThe traditional drivers of real estate value\u2014location, economy, and amenities\u2014are being transformed by a new calculus that must account for long-term environmental vulnerability,\u201d the First Street Foundation report stated.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Cash Flow Crunch: Falling Rents<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">As another key risk metric, investors must consider falling rents. Rising insurance costs and foreclosures, combined with lower employment in many areas, put pressure on rental incomes as landlords struggle to cover expenses. ATTOM\u2019s <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/market-trends\/single-family-rental\/2026-single-family-rental-market-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">2026 Single-Family Rental Market report<\/span><\/a><span data-preserver-spaces=\"true\"> states that in more than half the tracked counties, rents for three-bedroom homes dropped between 2025 and 2026. When rents stagnate or decline while acquisition costs rise, net yields fall, and investors find it harder to maintain positive cash flow.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Additionally, high-cost coastal counties in Florida, California, Tennessee, and Virginia have seen their rental yields fall to 3% <\/span><span data-preserver-spaces=\"true\">to<\/span><span data-preserver-spaces=\"true\"> 4%.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Cash flow analysis is less straightforward now. Comparing properties across counties requires weighing foreclosures, taxes, employment, wage growth, and insurance, since similar-looking properties can have very different outcomes.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">One overriding theme that has emerged is that investing in the Midwest and Northeast, with <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/finance.yahoo.com\/news\/florida-most-counties-risk-falling-115900847.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">nine of the 50 safest counties in Wisconsin and others in states such as Minnesota and Ohio<\/span><\/a><span data-preserver-spaces=\"true\">, appears to be a safer proposition.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Add interest rates as another wild card to the proposition, and it\u2019s possible to make an argument for investing in an area where cash flow is less on paper, based on cost and rental income<\/span><span data-preserver-spaces=\"true\">, but other<\/span><span data-preserver-spaces=\"true\"> factors, such as foreclosure rates, employment, and climate, make for a more stable environment. If the purchase is facilitated in an all-cash scenario with an eye toward refinancing when rates drop, the long-term outlook could be better despite the lower short-term <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cash-on-cash-return\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash-on-cash return<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While real estate is often described as the best way to build wealth, it can also be one of the fastest ways to lose it. Making a good investment often [&hellip;]<\/p>\n","protected":false},"author":613725,"featured_media":187435,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7364],"tags":[],"class_list":["post-187433","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-markets"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187433","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=187433"}],"version-history":[{"count":2,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187433\/revisions"}],"predecessor-version":[{"id":187436,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/187433\/revisions\/187436"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/187435"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=187433"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=187433"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=187433"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}