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California, New Jersey and Illinois have the highest concentrations of the most-at-risk housing markets in the country, with the biggest clusters in the New York City and Chicago areas and in central California, according to the third quarter Special Housing Risk Report published by ATTOM.

The new report determined risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes, and local unemployment rates. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM.

ATTOM determined that California, New Jersey and Illinois had 33 of the 50 counties considered most vulnerable to potential drop-offs during the third quarter. This included nine counties in and around New York City, seven in the Chicago metropolitan area and five in central California, with other at-risk areas scattered around northern and southern California and widely across other parts of the country.

At the other end of the risk spectrum, the South had the most markets considered least likely to decline, followed closely by the Midwest and a group of states in New England.

“Some parts of the country continue to pop up on the radar as places to watch for signs of housing-market drop-offs, based on key quarterly measures,” said Rob Barber, CEO at ATTOM. “Once again, it is important to stress that getting onto the most-vulnerable list doesn’t signal an imminent crash for any local market. It just means that they have greater potential tripwires that could lead to a decline. Those remain areas to watch, especially given the overall varied trends in the market.”

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