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For the reason that pandemic housing growth fizzled out in the summertime of 2022, some overheated elements of the nation—notably within the West, Southwest, and Southeast—have skilled residence value declines from their peak (see this map).
Whereas many of those markets have seen solely modest drops, just a few metro areas, similar to Cape Coral-Fort Myers, Florida, and Austin, have undergone what I’d contemplate “materials” residence value corrections, falling 18.9% and 27.3%, respectively, from their peaks.
These regional residence value declines increase the query: What number of mortgage debtors at the moment have detrimental fairness and are literally underwater?
To seek out out, ResiClub once again reached out to ICE Mortgage Technology.
1.5% —> The share of excellent U.S. house owner mortgages with detrimental fairness* (i.e., underwater) on the finish of Could 2026, in keeping with knowledge from ICE Mortgage Know-how supplied to ResiClub this week. Again in April 2025, that determine was 1%.
23% —> The share of excellent house owner mortgages with detrimental fairness (i.e., underwater) on the finish of September 2009, according to Cotality/FirstAmerica.
Why on a nationally aggregated foundation, are there nonetheless not many householders underwater regardless of residence value declines in some markets?
- Nationally combination current residence costs are nonetheless fairly near all-time highs. Whereas many pockets of the West, Southwest, and Southeast have seen current residence costs decline from at the very least some from their pandemic housing growth peak and new-home costs have rolled over from their peak, nationally aggregated current single-family costs are nonetheless fairly near all-time highs.
- Amortization of ultralow mortgage charges. Many householders locked in ultralow mortgage charges throughout the pandemic housing growth. With fastened charges round 2% to three%, these month-to-month funds included a bigger proportion of principal reimbursement from the beginning. Which means debtors have been paying down their balances extra aggressively than they might below higher-rate loans. As of Q1 2026, 49.9% of excellent mortgage holders nonetheless have charges under 4%, which has helped some debtors construct fairness sooner and provides them a higher buffer.
- Few consumers really bought on the peak in correction markets. Even in boom-to-correction markets like Austin or Cape Coral, Florida, solely a small share of householders purchased on the absolute high of the market in spring 2022. Most present householders in these areas purchased earlier than the height. This restricted publicity on the peak helps clarify why detrimental fairness, up to now, hasn’t been a giant downside, even in among the hardest-hit metros.
Whereas just one.5% of excellent U.S. house owner mortgages have detrimental fairness, there are just a few pockets of the Sunbelt the place that share is now greater than 5%.
Click here to view an interactive model of the map under
Among the many 100 main metro areas for which ICE Mortgage Know-how supplied knowledge to ResiClub, these 10 metros have the best share of house owner mortgages at the moment underwater:
- Cape Coral-Fort Myers, Florida —> 11.1%
- Lakeland, Florida —> 7.8%
- San Antonio —> 7.7%
- Austin —> 6.6%
- North Port, Florida —> 5.3%
- Jacksonville, Florida —> 4.1%
- Tampa, Florida —> 4%
- Baton Rouge, Louisiana —> 3.5%
- Dallas —> 3.5%
- Deltona, Florida —> 3%
Among the many 100 main metro areas for which ICE Mortgage Know-how supplied knowledge to ResiClub, these 10 metros have the bottom share of house owner mortgages at the moment underwater:
- Bridgeport, Connecticut —> 0.1%
- San Jose, California —> 0.1%
- Boston —> 0.2%
- Los Angeles —> 0.2%
- Hartford, Connecticut —> 0.2%
- Madison, Wisconsin —> 0.3%
- Grand Rapids, Michigan —> 0.3%
- Oxnard, California —> 0.3%
- New Haven, Connecticut —> 0.3%
- New York-Newark, New Jersey —> 0.3%
The desk under exhibits the classic breakdowns for the 30 main metro space housing markets with the best share of underwater mortgage debtors.
Click here to see an interactive/sortable model of the desk under, together with all 100 of the metros examined by ICE Mortgage Know-how.
Even in markets like Cape Coral (11.1%) and Austin (6.6%) which have greater shares of excellent house owner mortgages at the moment underwater, that’s nonetheless far off from the degrees seen on the top of the GFC period bust. For comparability, again in September 2009 a staggering 68% of mortgage debtors in Nevada, 48% in Arizona, and 45% in Florida have been underwater.
To this point, within the down markets, it’s actually simply the 2022, 2023, 2024, and 2025 vintages being impacted.
And in these down markets, it’s thin-equity debtors, similar to FHA and VA debtors who put down as little as 3.5%, who usually tend to have crossed into precise detrimental fairness (for proof, see this chart).
Large image: If residence costs in elements of the Southwest, Southeast, and West proceed to expertise gentle residence value pullbacks, the share of current debtors who’re underwater in these markets will rise past the degrees we’ve outlined right this moment. Nevertheless, barring a serious downward shift, it nonetheless wouldn’t come near the depths of detrimental fairness seen in 2009 or 2010.
*Destructive fairness means a house owner owes extra on their mortgage than the present market worth of the house. Within the housing sector, that is traditionally known as being underwater. In fact, some debtors who don’t have detrimental fairness—however are solely barely fairness optimistic—might nonetheless be within the gap after factoring in transaction prices, and different debtors/householders who made a typical down fee, specifically those that purchased in spring 2022 in markets like Punta Gorda, Florida, or Austin, may need optimistic fairness however might nonetheless have a house value lower than their buy value. The latter two examples aren’t what the trade calls underwater, even when they’re successfully within the gap.
