#United States #Irvine #Mortgage Rates #Home Equity #ATTOM

Overview

The first quarter of 2026 has seen a notable decline in home equity rates, according to ATTOM, a prominent provider of real estate data and analytics. The report indicates that 43.3% of mortgaged residential properties across the U.S. are now considered equity-rich. This figure represents a decrease from 44.6% in the previous quarter and reaches the lowest percentage since late 2021. Meanwhile, the share of properties categorized as seriously underwater has increased to 3.2%, marking a rise from 3% in the last quarter of 2025.

Declining Equity-Rich Homes

The concept of an equity-rich home refers to properties where the total loan balance is not more than 50% of their estimated market value. With the rising mortgage rates alongside cooling home prices, the percentage of equity-rich homes has declined, indicating a potential moderation in homeowner equity. Despite these shifts, experts believe that homeowner equity remains robust overall.

States such as Illinois, Alaska, and South Dakota have reported marginal increases in the number of equity-rich homes, while substantial declines were recorded in states like Florida and Arizona. To better understand these changes, it is essential to analyze the variations across different regions and their specific real estate markets.

Variations Across States

The toll of these shifts in home equity is not evenly spread across the nation. The states with the highest shares of equity-rich homes include Vermont, New Hampshire, and Montana, with percentages ranging from 85.7% to 57.7%. In contrast, Florida and Colorado experienced significant drops in equity-rich homes, indicating fluctuation patterns that homeowners and potential buyers should keenly observe.

The Underwater Rate Concern

The share of homes that have fallen into the ‘seriously underwater’ category has been rising as well. A property is labeled seriously underwater when the homeowner owes at least 25% more than the estimated market value. There are alarming increases in states like Kentucky and Louisiana, which need to be addressed by stakeholders in the housing market. Areas with high underwater rates include cities like Baton Rouge and Jackson.

Underlying Reasons for Decline

The current cooling market conditions, influenced by rising mortgage rates, have contributed to the overall decline in equity-rich homes. As prices for homes stabilize after a prolonged period of rapid increases, the balance couples with shifts in loan dynamics that homeowners face. ATTOM’s report serves as an essential barometer for current homeowner equity levels and provides insights into future trends.

Metro Area Analysis

In metropolitan areas, the trend of declining equity-rich homes is prevalent, with 87% of analyzed regions showing reduced equity-rich rates compared to the previous quarter. Notable cities like San Jose and Los Angeles still maintain relatively high equity-rich averages while cities in Louisiana face considerable obstacles with high underwater levels.

Conclusion and Future Outlook

In conclusion, the first quarter of 2026 has presented a complicated picture of homeowner equity nationally. While the drop in the share of equity-rich homes raises some concerns, the overall health of homeowner equity remains comparatively favorable. The market's response to systemic changes, particularly regarding mortgage rates and property values, will play a pivotal role in determining the trends heading into subsequent quarters as the real estate market continues to navigate through these shifts. Homeowners and buyers alike should pay attention to these emerging trends to make informed decisions in a fluctuating market.