California and New Jersey home to riskiest markets for home ownership

California and New Jersey homeowners, be warned: most of the riskiest markets for foreclosures and troubled mortgages were in those two coastal states.

In the first quarter, California had 14 of the 50 most at-risk markets in the country, according to a new report from real estate analytics firm Attom Data. New Jersey had nine.

But the areas that qualify as risky markets for homeowners tend to dissipate toward the south.

Among the 50 least at-risk counties, Tennessee clocked nine. More than half of these markets are in the South and 12 are in the Midwest.

Attom determined risk by a range of metrics, including the number of foreclosures, affordability and the proportion of “seriously” underwater mortgages — loans at least 25 percent more than the property’s estimated market value.

The country’s most at-risk areas were in the Northern part of California and have been recently struggling with wildfires: Butte, Humboldt and Shasta counties.

New Jersey’s most at-risk counties were mostly in the central and southern parts of the state, though in the past, counties around New York City ranked among the riskiest — though that was not the case during the first quarter. Atlantic and Cumberland, counties along New Jersey’s southern coast, also ranked top in the country for the most at-risk counties. Cumberland had the fourth-highest foreclosure rate in the country.

Countrywide, the proportion of homes with troubled mortgages and the number of foreclosures was low during the first quarter, according to Attom. Under 3 percent of homes had mortgages that Attom classified as “seriously underwater.” And in May, foreclosure filings dropped 1 percent from the previous month to about 35,500, according to another recent analysis from Attom, though this figure is up 9 percent year-over-year.

However, the firm noted in its analysis that it is still challenging to buy a home because of high pricing stemming from years of post-pandemic home-buying. Attom looked at 109 counties and found that to pick up a median-priced home, a buyer would have to spend more than half their income to cover a down payment, mortgage and other expenses.