More Deed Holders Slip Under Water. Lost Equity Risk Varies by Region.

The average deed holder is doing OK—sitting on $299K. But as high as home values are, across-the-board homeowner equity is down from its 2024 highs. Home equity belonging to the average U.S. deed holder went down by about $13K last year.

In 32 states, people have been losing equity.

Most strikingly, the number of mortgage borrowers under water went up by about a fifth. More than a million owners of mortgaged homes are now under water, Cotality’s Homeowner Equity Report shows. And it shows some big differences across various regions of the country.  

What’s Your Ratio? LTV Means Loan Balance Over Home Value.

Loan-to-value (LTV) ratios have risen dramatically in recent times. Especially noticeable is the percentage of deed holders whose debt is at least 85% of the home’s value. What’s causing the rise in debt over value?

Economist Dr. Selma Hepp, representing Cotality, said that the sources of the problem include first-time buyers and those with modest incomes struggling and using small down payments, or piggy-back loans.

Market analysts get uneasy when many deed holders’ debts equal what their properties are worth, or even more. If a deed holder owes more to the bank than the estimated property value, the home is under water. That’s the commonly used term to describe a negative amount of equity.

Whether people’s property values can outpace their debt in 2026 and beyond depends on the job market and our overall economy. Home values are increasing overall, but trends are patchy.

Some Have Profited Handsomely From a Dramatic, Thirteen-Year Home Equity Rise.

We often hear about the mound of equity deed holders have. Boomers, especially, have seen the value of their deeds surge over a 13-year housing boom. The number of equity-rich borrowers reached a peak in late 2024. In the property value surge from 2023 to 2024, who gained the most equity wealth? The deed holders of Rhode Island, New Jersey, Connecticut, and Missouri.

Illinois homeowners weren’t far behind. A third of the mortgage borrowers in the Land of Lincoln were equity-rich by late 2024. Wyoming owners rode a similar updraft. The percentage of seriously underwater mortgages (defined as at least 25% more debt than equity) fell from 8.8% to 2.4% in just one year in Wyoming. Things were also looking up for struggling deed holders in Mississippi and Missouri.

When 2024 was over, about half of all U.S. home loan borrowers could say they had paid half their loans off, or more. Many, according to ATTOM CEO Rob Barber, had six-figure real estate wealth ready to use for anything they needed or wanted. People were sitting pretty in Las Vegas, Los Angeles, and San Francisco.

But while values remain elevated, they’re stalling in some areas. The average deed holder’s capacity to outrun inflation seems to be slowing down.

What’s an Underwater Deed Holder to Do?

Borrowing money to buy something comes with risks. Especially something as big as a home. So, what if home values in your area droop and you find yourself owing more on the home than it’s valued?

Your first thought might be to hope the market will recover in the future. As statistics show, that’s a sound thought to have. Home values rise and dip. Hold on through the cycles, and equity will recover. This brings up a basic rule of home buying: Buy a home you like. Acquire a deed you’re happy to hold for the long haul.

Granted, this is easier said than done. Even deed holders who don’t have to sell would still prefer to have that option open. They may be comfortable in their present homes. Yet they might feel the stress. Especially if it means needing to change career hopes or family-starting dreams.

That’s why we don’t want to be glib and say: “The market is what it is.” And still there’s a lot to be said for riding out market ups and downs, paying the mortgage off faithfully every month.

With this said, let’s get back to our map.

Deed Holder Capacity to Build and Hold Equity Varies by Region. Northeast Leads in Wealth-Building.

People with zero or negative equity are becoming more common in Austin, Texas. Increasing building activity has upped supply and pressed home values down.

In Louisiana, New Orleans, Baton Rouge, and Lafayette deed holders are all dealing with property value reductions. These cities tend to be hit hard by storm surges.

Equity isn’t going up as fast as it used to in the Northeast. Still, the deed holders of New Jersey, Connecticut, and Rhode Island continue gaining the most of all U.S. homeowners.

Meanwhile, some 2.5% of U.S. deed holders slipped into ATTOM’s “seriously underwater” category. Again, this means the debt a deed holder carries on their titles amounts to a fourth more than their home values.

By late 2024, one in 39 mortgaged homes was in that position. (Much better than in 2020, when one in 15 were.) 

Deed holders’ equity dropped in Louisiana, Alaska, North Dakota and Maryland. The number of equity-rich deed holders wilted in Arizona and Florida, Idaho, Oregon, Kansas, Georgia, and Utah. Alarming numbers of deed holders went under water in Mississippi, Kentucky, Iowa, and Arkansas.

The biggest equity losses were in Florida and California (two states enduring severe climate and weather impacts) and D.C. (where slews of government workers have been laid off).

In the Sun Belt, notably in Florida and Texas, new construction has brought supply up, dragging down home prices. And potential buyers are less excited about Florida, given rises in insurance, taxes, and storm risks.

What Changes Lie Ahead? Worst-Case Scenarios, Anyone?

The U.S. housing market slowed down in 2025. That pattern continues.

New generations of home seekers are already dealing with a national home affordability challenge that’s further complicated by climate impacts.  A bad downward employment trend could add insult to injury.

And if we see serious issues with the job market, more people will struggle. Especially if they’ve taken on risky extra loans.

That said, through any scenario, time is on the deed holder’s side. Consider this. The market has seen a housing crisis before, in 2008-09. Many deed holders were overcome by their mortgages. Some left their homes. Others, seeing rents as expensive as their mortgage payments, stayed put. For those who stayed, their mortgages may now be just half the home’s value, or less. Even in the worst of times, patience—if it’s possible—does pay off.

Cotality’s next Homeowner Equity Report comes out in March 2026. It will be one to watch—and we’ll be reporting the news back to our readers.

Important note: At Deeds.com, we cannot offer financial advice. If you need individual guidance, you need your own financial adviser.