According to a recent report released by real estate data firm ATTOM, counties near New York City, Chicago, and Philadelphia are at the greatest risk.

The report is based on home prices in the second quarter of 2023, average local wages, the percentage of homes at risk of foreclosure, housing affordability, the percentage of underwater properties, local unemployment rates, and other factors.

ATTOM CEO Rob Barber said in a statement, "We continue to see some areas of the U.S. housing market that are on somewhat shaky ground, or more so than others."

That doesn't mean that one area or group of areas is about to collapse. The overall market and economy remain too strong to warrant an imminent warning. But there are still some weak spots to watch, especially if the market turns down.

Which real estate markets are most at risk?

New Jersey and Illinois have the highest concentration of risky housing markets. Of the 50 most vulnerable counties, 23 are located within the borders of these two states.

That doesn't mean homeowners in these states should panic or buyers looking for affordable housing 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. Despite today's high home prices and mortgage rates, there are still more homebuyers on the market than homes for sale.

These factors are likely to keep most housing markets stable, even if they experience some turbulence.

Eight counties in the New York metropolitan area are considered more vulnerable to economic downturns. Brooklyn and Staten Island, as well as six suburban counties in New Jersey outside of New York City, have more volatile housing markets.

There are six at-risk counties in the Chicago metropolitan area, three in Philadelphia, and six in California, two of which are in the Sacramento metropolitan area.

In riskier housing markets, there are more homeowner mortgages underwater, a higher percentage of homes receiving foreclosure notices, and unemployment rates generally higher than the national average.

Which housing markets are the safest?

On the flip side, the safest and most stable housing markets are located in the Southern United States and New England. Of the 51 least safe counties, 18 are in the South, 17 in the Northeast, 11 in the Midwest, and 5 in the West. (The West is also the most expensive region in the nation for housing affordability).

In these markets, fewer homeowners are typically in danger of foreclosure due to underwater loans. Unemployment rates are also lower in these areas, with 39 of 51 counties having unemployment rates below 3%.

Virginia has the most stable market, with six counties considered the least risky. Five of these are located in Washington, D.C.

Massachusetts has five counties, three of which are located in the Boston metropolitan area. Tennessee, Montana and New Hampshire are tied with four each. The Nashville metropolitan area has three and the Billings metropolitan area has two.

Manchester and Concord in New Hampshire were also named the safest housing markets. This is good news for the New Hampshire markets, which have consistently topped the Realtor.com® Hottest Markets list in recent months.