June 03, 2025
If you're feeling a little uncertain about where the housing market is headed, you’re not alone.
After years of climbing prices and fierce competition, many are beginning to ask, “Is the market cooling off?”
And while we’re not sounding the alarm just yet, certain parts of the country are starting to show signs of strain—and they’re worth paying attention to.
According to new data from ATTOM, a leading property data firm, four regions stand out as particularly vulnerable to a market correction: California, Illinois, Florida, and the New York City metro area.
These areas have been flagged due to a combination of affordability issues, high foreclosure rates, and economic pressure like rising unemployment.
California: Affordability Crisis Meets Economic Pressure
California has long had one of the hottest real estate markets in the country—but that heat comes with consequences. A whopping 14 of the 50 most at-risk counties nationwide are in California.
That includes inland areas like Fresno, Kern, and San Joaquin, where prices surged during the pandemic as buyers fled expensive coastal cities. Now, many of those areas are showing signs of instability.
In Riverside County, for example, homeownership costs consume over 70% of the average income—double the national average. Foreclosures and unemployment are also higher than average, putting added stress on local markets.
As a realtor, we’ve seen how quickly sentiment can shift. In these areas, sellers may need to price more competitively, and buyers should focus on long-term value rather than assuming fast appreciation.
Illinois: Chicago's Suburbs Are Feeling the Strain
The Chicago area is showing its own set of challenges. Five counties—Cook, Kane, Kendall, McHenry, and Will—are facing increased risk. What’s behind this?
It’s a mix of economic concerns, softening demand, and high property taxes. Even the suburban markets that were once seen as safe bets are now feeling pressure.
While the data doesn’t indicate a crash, it does suggest that buyers and sellers in these markets should proceed with more caution and lean on local expertise before making moves.
Florida: Rapid Growth Meets Market Saturation
Florida has seen a major boom in recent years, driven by people relocating for the weather and tax savings. But that surge in demand sparked rapid new construction across the state.
Seven counties—including Pasco, Polk, and St. Lucie—now show signs of vulnerability. Some of these areas are seeing elevated foreclosure rates and a rise in underwater mortgages. Overbuilding, combined with rising insurance premiums and slowing demand, could lead to downward price pressure in certain pockets of the state.
New York City Metro: Extreme Unaffordability Could Tip the Scales
The NYC metro has always been pricey, but affordability is nearing unsustainable levels. In Brooklyn (Kings County), homeownership now eats up over 100% of the average local wage.
Staten Island and parts of North Jersey like Essex and Passaic counties are also under pressure. Even a slight economic shift—like rising interest rates or job losses—could cause some serious softening in these markets. Buyers are being priced out, and sellers may have to recalibrate expectations.
Whether you’re buying, selling, or just keeping an eye on the market, here’s the big takeaway: Location matters now more than ever.
These four regions—California, Illinois, Florida, and NYC—are not guaranteed to crash, but they are more sensitive to economic changes.
If you’re a seller in one of these high-risk areas, now’s the time to price realistically and market strategically. Buyers should avoid rushing and take advantage of softer conditions and greater negotiation leverage.
And homeowners—especially those with adjustable-rate mortgages—should stay informed and financially prepared in case market conditions shift.
On the other hand, more stable markets like Wisconsin, Virginia, Tennessee, and Pennsylvania are holding strong. These areas are benefiting from balanced growth, lower unemployment, and more manageable housing costs.
Real estate is hyper-local. What’s true in one market may not apply just a few zip codes away. That’s why it’s more important than ever to work with a knowledgeable local agent who understands the micro-trends affecting your neighborhood.
Have questions about your specific market or planning to buy or sell soon? Let’s connect and come up with a smart strategy that works in today’s evolving market.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
