Home Equity Rates Show Strong Recovery in Second Quarter of 2025

Strong Recovery of Home Equity Rates in Q2 2025

In a refreshing turn of events, recent data from ATTOM reveals a rebound in home equity rates during the second quarter of 2025. With a notable rise, 47.4% of mortgaged residential properties across the United States are now classified as equity-rich. This reflects a significant increase from 46.2% recorded in the preceding quarter and marks a welcome change after several preceding quarters of decline. Just last year, the proportion peaked at an impressive 49.2% during Q2 2024.

What Does It Mean to be Equity-Rich?

When we say a home is 'equity-rich,' it indicates that the outstanding loan balance secured by the property is no more than half of its estimated market value. This is a crucial metric, as homeowners with substantial equity can better leverage their properties for future investments or access cash through refinancing.

However, not all regions are experiencing this positive shift uniformly. ATTOM’s report notes that the increase in equity-rich properties has not been evenly distributed across the nation. States like Louisiana are still grappling with high loan balances that exceed the actual market value of homes.

State-by-State Analysis

Quarterly, the share of equity-rich homes has climbed in 37 states and the District of Columbia. However, only 19 states recorded higher equity-rich rates compared to the same quarter in the previous year. Connecticut exhibited the most substantial annual uptick, going from 45.5% to 49.4%, while New Jersey also saw significant growth from 50% to 53.6%.

On the contrary, Florida and Georgia saw declines in their equity-rich proportions, with Florida dropping from 56% to 48.5% and Georgia from 47.9% to 43.3%.

Declining Rates of Seriously Underwater Homes

In tandem with the rebound of home equity, the report indicates a minor drop in seriously underwater homes, defined as properties where loan balances exceed market values by 25% or more. This share fell from 2.8% to 2.7% quarter-over-quarter, although it remains slightly above 2.4% from the previous year. This improvement highlights a slow but steady recovery in the housing landscape as more homeowners regain equity.

Regional Disparities Continue

Despite positive trends, the disparity among regions is stark. New England has emerged as a stronghold for equity-rich homeowners, with Vermont boasting an impressive 84.9% of its homes falling into this category. In stark contrast, Louisiana struggles with only 18% of homes classified as equity-rich, illustrating significant regional economic disparities.

The study also uncovers that County rankings show several counties in Michigan leading the way with high proportions of equity-rich homes, further emphasizing economic contrasts across states.

Conclusion

The findings from ATTOM underline both optimism and caution within the current housing market. While the rise in equity-rich homes is a positive sign for homeowners and potential buyers, the continued struggles in certain areas, particularly in the southern states, reveal a complex and uneven recovery. Investors and sellers alike should remain informed and vigilant about these regional trends as they navigate the bustling real estate market.

In summary, as home values continue to rise, many homeowners are regaining financial confidence through improved equity—an encouraging sign as we move further into 2025, illustrating that the housing market is gradually stabilizing and entering an optimistic phase after challenging times.