No, we don’t have a crystal ball. And yes, real estate is a great investment in the long run. But in the interim, here’s what may happen to your home if—when?—the bubble pops. (For risk assessment ratings, 1 is the safest risk and 10 is the shakiest.)

(Photo: James Leynse/Corbis)

The Financial District
We hate to be the bearer of bad news, especially for an area most everyone wants to champion, but if this economy goes south, the financial district’s residents may wish they’d shorted their properties. Yes, it has cobblestone streets, turn-of-the-century façades, impressive views, and great transit. But it remains stubbornly in need of services (even though, as brokers and buyers endlessly point out, FreshDirect does deliver there), and it’s mighty quiet after its pin-striped daytimers head home. As many brokers will say off the record, if you have to compromise on where to eat and shop, it’s fringe. And in downturns, fringe neighborhoods almost always see dizzying drops. Moreover, though the area has attracted families, brokers say much of the new building is aimed at entry-level buyers. If they lose their jobs (and people starting their careers are more vulnerable) or elevated interest rates make a mortgage less attractive, they may decide to sell or just stick to renting. In recent years, new construction and commercial-to-residential conversions have added hundreds of units to the area; with inventory at an all-time low right now, those apartments are being snapped up by buyers willing to compromise on location. But in a recession, the same money they’re sinking into a luxurious one-bedroom way downtown, say $600,000, could potentially buy a similarly appointed pad on the Upper East Side close to restaurants and Central Park. Residents could wind up ditching this area for their first-choice neighborhood, and buyers who could take their place may give it the brush-off as well.

Risk Factor: 8.0