News & Trending Mortgage & Loans News

10 Most Vulnerable Housing Markets in America if a Recession Hits

A housing market downturn might be on the horizon for these vulnerable markets.

By Sarah Sharkey

Edited by Calista Headrick

Updated Feb. 20, 2025

A housing market downturn can have a big impact on homeowners, prospective homeowners, and renters.

With falling prices, some homeowners refrain from selling their property to avoid locking in a loss in home equity. Others, though, are forced to sell anyway due to life circumstances, which could leave limited money moves on the table for homeowners looking to leave an area.

Some housing markets are more vulnerable to potential downturns than others. Here are 10 of the most vulnerable ones in the U.S. based on a recent housing market impact risk report by ATTOM.

Steal this billionaire wealth-building technique

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.

If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)

Butte, California

family residential neighborhood in chico

According to the recent ATTOM report, 6.7% of properties are underwater in Butte, which means that the homeowners owe more on the property than it is worth. For example, a homeowner with a $500,000 mortgage on a house currently valued at $400,000 would be considered underwater on their mortgage.

Additional signs of instability include the fact that one in every 816 properties is facing a foreclosure filing. Plus, an average of 49.5% of income is needed to buy a property in the area.

The median sale price in Butte County is $420,000. Although this represents a 20% year-over-year increase, the number of homes sold has dropped by over 15% in the last year.

Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.

San Joaquin, California

A 6.8% unemployment rate in San Joaquin, California, could spell trouble for the housing market. Properties currently underwater come in at 5.8%, and one in every 921 properties face foreclosure filings. San Joaquin’s housing market is showing signs of distress.

Although the median home price of $536,312 is up around 2% over last year, the median sale price is considerably lower at $495,000. With an average of 58.2% of income needed to buy a property, that puts homeownership out of reach for many.

Kings, California

afternoon sun shines on the historic buildings

In Kings, California, 7.1% of properties are currently underwater. With an 8.2% unemployment rate and an average of 42.8% of income needed to buy a property in the area, it’s a tough market for many right now.

The average value of a house in Kings County as of February is $328,205, which is up around 4% from last year. The median sales price is $332,483.

Get a free stock valued between $5 to $200

Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.

Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.

Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.¹ This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice. To get stock reward, new customers need to sign up, get approved, and link their bank account. Stock rewards shares cannot be sold until 3 trading days after the reward is granted and the cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at <a href="https://robinhood.com/us/en/support/articles/open-account-pick-your-stock/">rbnhd.co/freestock</a>. Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement. Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.00% (as of 12/27/24) APY² Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings. on your uninvested cash³ Interest is earned on uninvested cash swept from your brokerage account to partner banks. Partner banks pay interest on your swept cash, minus any fees paid to Robinhood. As of Nov 15, 2023, the Annual Percentage Yield (APY) that you will receive is 1.5%, or 5% for Gold customers. The APY might change at any time at the partner banks' or Robinhood's discretion. Additionally, any fees Robinhood receives may vary and are subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. and the ability to buy and sell stocks 24 hours a day, 5 days a week.

Open and fund a Robinhood account and earn up to $200 in stock

Humboldt, California

morning light shines historic downtown eureka

Humboldt residents need to spend an average of 53.6% of their income to buy a property. With the area facing a 5.8% unemployment rate and one in every 642 properties facing foreclosure filings, it could be bad news for this housing market.

The average value of a house has dropped by 2.6% to $429,902 in the last year. With a downward slide in price points, it’s not surprising that 5.1% of properties are underwater.

Cumberland, New Jersey

On the East Coast, the Cumberland housing market is flashing distress signals. Residents need to spend an average of 33.6% of their income in order to buy a property, which is above the generally recommended limit of 28%.

On top of a 7.7% unemployment rate, one in every 571 properties faces foreclosure filings. Somewhat surprisingly, 7.9% of properties are underwater, even though the average property value in the county has risen by 7.3% in the last year.

Kern, California

Back on the West Coast, Kern residents need to fork over an average of 41.5% of their income to buy a property. With an 8.7% unemployment rate, it’s not too surprising that 1 in every 770 properties is facing foreclosure filings.

The average property value has climbed by 4.9% in the last year to $355,360, but 5.7% of properties are underwater.

Grow Your $$: 11 brilliant ways to build wealth after 40

Atlantic, New Jersey

The Atlantic housing market is another Garden State market dealing with major vulnerability. Homebuyers need to spend an average of 40.7% of their income in order to purchase a house. An unemployment rate of 6.8% puts additional pressure on many households.

In the last year, average housing values have jumped by over 11% to $214,734. But even that jump hasn’t been enough to help all homeowners. In fact, 5.7% of properties are still underwater in the area.

Solano, California

historic city center of fairfield, california

Solano residents need to spend an average of 54.7% of their monthly income in order to buy a house. That puts homeownership out of reach for many would-be buyers. Average home values in the area have risen by a modest 1.1% in the last year, but 5.1% of properties are still underwater on their mortgage.

A 5.7% unemployment rate in the area puts additional constraints on many households. The fact that one in every 1,069 properties has foreclosure filings attached highlights the growing strain on homeowners in the area.

Lake, Indiana

Residents in Lake, Indiana need to spend an average of 28% of their monthly income to buy a house. Although that’s right on the recommended target, a significant portion of a household’s income is still needed for housing costs.

In this Chicago suburb, 10.9% of properties are underwater. The downward pressure could explain why one in every 608 properties faces foreclosure filings.

Earn up to a $300 bonus and grow your money with up to 3.80% APY

This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 3.80% APY.⁴ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. See full bonus and annual percentage yield (APY) terms at <a href="http://www.sofi.com/banking#1">sofi.com/banking#1</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of Jan. 24, 2025. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a>. See the SoFi Plus Terms and Conditions at <a href="https://www.sofi.com/terms-of-use/#plus">https://www.sofi.com/terms-of-use/#plus</a>.

This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!

SoFi has no account or overdraft fees⁵ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A.  The 30-Day Evaluation Period refers to the "Start Date" and "End Date" set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the "30-Day Evaluation Period"). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY.  Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage. and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.⁶ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at <a href="http://sofi.com/legal/banking-fees/">sofi.com/legal/banking-fees/</a> ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a> Plus, you can receive your paycheck up to 2 days early.⁸ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.

SoFi is a Member, FDIC. ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a>

Open your SoFi account and set up direct deposit

Madera, California

Madera residents need to spend an average of 49.9% of their income to purchase a home in the area. For many, that means homeownership is off the table. With a 7.4% unemployment rate and one in every 648 properties facing foreclosure filings, the Madera housing market is more vulnerable than others.

Bottom line

Whether you’re a homeowner or plan to become one, it’s important to stick with a purchase that fits into your budget. For many, that might mean renting for longer to save up a bigger down payment or actively choosing to expand your geographic search radius. But trapping yourself into an unaffordable mortgage in pursuit of building home equity is usually not the right solution.

More from FinanceBuzz:

Lucrative, Flat-Rate Cash Rewards

Wells Fargo Active Cash^® Card

5.0

Wells Fargo Active Cash^® Card

Apply Now

Rates and fees

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks

Card Details

Steal this billionaire wealth-building technique

Butte, California

San Joaquin, California

Kings, California

Get a free stock valued between $5 to $200

Humboldt, California

Cumberland, New Jersey

Trending Stories

Kern, California

Atlantic, New Jersey

Solano, California

Lake, Indiana

Earn up to a $300 bonus and grow your money with up to 3.80% APY

Madera, California

Bottom line

Lucrative, Flat-Rate Cash Rewards

Wells Fargo Active Cash® Card

Wells Fargo Active Cash® Card

Current Offer

Annual Fee

Rewards Rate

Benefits

Drawbacks

Learn how to make an extra $200

Must-Read Buzz

Advertiser Disclosure

Editorial Policy

Wells Fargo Active Cash^® Card

Wells Fargo Active Cash^® Card