When so much wealth is tied up in one asset, the risk — or stability — of a local market can mean a lot to a homeowner.  Bloomberg.com asked real estate website Zillow.com to figure out which U.S. markets have been the riskiest over the last 35 years.

The measure of risk: Assuming buyers held on to their homes for five years before selling, what was their chance of suffering a loss? As a secondary criterion, we compared the worst annual losses homeowners in these markets have experienced since 1979.

Following this list of the Top 20 riskiest housing markets is a list of the Top 5 most stable.

20. Minneapolis – St. Paul, Minnesota
Risk of loss: 18.8%
Worst year: -10.1% (July 2010 – June 2011)
Best year: 13% (July 1999 – June 2000)
Average annual gain: 3.5%
Zillow 12-month forecast: -1.5%

19. Cleveland
Risk of loss: 20.5%
Worst year: -11.2% (Oct. 1981 – Sept. 1982)
Best year: 14% (Oct. 1982 – Sept. 1983)
Average annual gain: 2.3%
Zillow 12-month forecast: 5.9%

18. Washington, D.C.
Risk of loss: 20.5%
Worst year: -14.6% (Jan. 2008 – Dec. 2008)
Best year: 26% (April 2004 – March 2005)
Average annual gain: 5%
Zillow 12-month forecast: 1.5%

17. San Jose, California
Risk of loss: 21.4%
Worst year: -14.9% (April 2008 – March 2009)
Best year: 35% (July 1999 – June 2000)
Average annual gain: 6.6%
Zillow 12-month forecast: 4%

16. Las Vegas
Risk of loss: 21.4%
Worst year: -30.1% (Oct. 2008 – Sept. 2009)
Best year: 51% (Oct. 2003 – Sept. 2004)
Average annual gain: 3.1%
Zillow 12-month forecast: -1.2%

15. New Orleans
Risk of loss: 22.2%
Worst year: -7.2% (Oct. 1987 – Sept. 1988)
Best year: 16% (July 2012 – June 2013)
Average annual gain: 3.3%
Zillow 12-month forecast: 8%

14. Phoenix
Risk of loss: 22.2%
Worst year: -20.5% (Jan. 2008 – Dec. 2008)
Best year: 48% (Oct. 2004 – Sept. 2005)
Average annual gain: 3.8%
Zillow 12-month forecast: 3.8%
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13. San Francisco
Risk of loss: 23.9%
Worst year: -16.3% (Jan. 2008 – Dec. 2008)
Best year: 28% (July 1999 – June 2000)
Average annual gain: 6%
Zillow 12-month forecast: 12.6%

12. Indianapolis
Risk of loss: 24.8%
Worst year: -8.9% (Oct. 2003 – Sept. 2004)
Best year: 12% (July 1980 – June 1981)
Average annual gain: 2.5%
Zillow 12-month forecast: 2.8%

11. Denver
Risk of loss: 27.4%
Worst year: -4.8% (Jan. 2008 – Dec. 2008)
Best year: 14% (Jan. 1999 – Dec. 1999)
Average annual gain: 3.9%
Zillow 12-month forecast: -0.1%

10. New York
Risk of loss: 27.4%
Worst year: -8.7% (April 2008 – March 2009)
Best year: 24% (July 1986 – June 1987)
Average annual gain: 6%
Zillow 12-month forecast: 3.6%

9. San Diego
Risk of loss: 27.4%
Worst year: -18.7% (Jan. 2008 – Dec. 2008)
Best year: 30% (Oct. 2003 – Sept. 2004)
Average annual gain: 5.3%
Zillow 12-month forecast: 5.3%

8. Sacramento, California
Risk of loss: 27.4%
Worst year: -19.1% (Jan. 2008 – Dec. 2008)
Best year: 25% (Jan. 2004 – Dec. 2004)
Average annual gain: 4.8%
Zillow 12-month forecast: 4.9%

7. Detroit
Risk of loss: 28.2%
Worst year: -19.1% (April 2008 – March 2009)
Best year: 20% (Oct. 2012 – Sept. 2013)
Average annual gain: 2.3%
Zillow 12-month forecast: -0.5%

6. Dallas-Fort Worth, Texas
Risk of loss: 29.1%
Worst year: -7.5% (July 1987 – June 1988)
Best year: 12% (Jan. 1980 – Dec. 1980)
Average annual gain: 2.1%
Zillow 12-month forecast: 1.5%

5. Los Angeles
Risk of loss: 29.1%
Worst year: -18.5% (Jan. 2008 – Dec. 2008)
Best year: 30% (Oct. 2003 – Sept. 2004)
Average annual gain: 5.8%
Zillow 12-month forecast: -0.4%

4. Boston
Risk of loss: 29.9%
Worst year: -8.3% (July 1990 – June 1991)
Best year: 29% (April 1985 – March 1986)
Average annual gain: 6.2%
Zillow 12-month forecast: 4.3%

3. Riverside, California
Risk of loss: 30.8%
Worst year: -28.7% (April 2008 – March 2009)
Best year: 37% (Oct. 2003 – Sept. 2004)
Average annual gain: 4.6%
Zillow 12-month forecast: -1.1%

2. Providence, Rhode Island
Risk of loss: 31.6%
Worst year: -12.1% (Jan. 2008 – Dec. 2008)
Best year: 30% (July 1986 – June 1987)
Average annual gain: 5.2%
Zillow 12-month forecast: 6.6%

1. Hartford, Connecticut
Risk of loss: 36.8%
Worst year: -8.2% (April 1990-March 1991)
Best year: 31% (Jan. 1987-Dec. 1987)
Average annual gain: 4.2%
Zillow 12-month forecast: 0.8%

* * * * *

And the stablest real estate markets?

5. Raleigh, North Carolina
Risk of loss: 9%
Worst year: -5% (July 1981 – June 1982)

4. Nashville, Tennessee
Risk of loss: 9%
Worst year: -4% (July 2010 – June 2011)

3. Louisville-Jefferson County, Kentucky
Risk of loss: 3%
Worst year: -3% (April 1981 – March 1982)

2. Pittsburgh
Risk of loss: 0%
Worst year: -7% (July 1980 – June 1981)

1. Buffalo, New York
Risk of loss: 0%
Worst year: -4% (July 1994 – June 1995)

Methodology: For each of the 50 largest housing markets, Zillow.com analyzed average home prices over 117 rolling five-year periods since 1979, as far back as reliable data go. The “risk of loss” is the percentage of those periods that created negative returns for homeowners. In the case of ties between markets, those with the bigger drop in their worst years were ranked as riskier.

If you’ve got a mortgage (including a rental property), even a small price decline can wipe out your equity.  The bank still expects the same check every month.

In the wake of the housing crisis, a number of academics and investing experts are urging homeowners to take a more sophisticated approach to the risks of real estate. A home can be as risky as a stock, and it needs to be treated that way. That means considering how much risk you’re taking before you buy.  My Rental Real Estate Analysis Excel Spreadsheet is designed to assist in ensuring a profit, and reduce the risk of making a mistake when buying property.

via Yahoo News