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Declining Share of Equity-Rich Homes: An Overview

The latest report from ATTOM, a prominent provider of real estate analytics and property data, indicates a significant dip in the share of equity-rich homes across the United States. As of the second quarter of 2026, the percentage of residential properties classified as equity-rich has fallen to 41.1%, the lowest level observed in nearly five years. This decline raises important questions about the health of the real estate market and its potential implications for both homeowners and investors.

The Current State of Equity-Rich Homes

Equity-rich homes are defined as those for which the combined loan balances do not exceed half of their estimated market value. This latest statistic reflects a noticeable decrease from 43.3% in the first quarter of 2026 and 47.4% during the same period last year. Despite these troubling figures, ATTOM's CEO, Rob Barber, emphasized that both equity-rich and seriously underwater homes retain healthier levels compared to pre-2020 benchmarks. Nevertheless, Barber cautioned that the continued decline could signify an emerging trend deserving of close scrutiny.

State-by-State Analysis

ATTOM's report reveals a mixed landscape for equity-rich homes across the U.S. In the last quarter, 13 states reported an increase in the share of equity-rich homes, while only four states showed improvement from a year earlier. Notable increases year-over-year occurred in North Dakota (rising from 30.2% to 32.9%), South Dakota (from 52.1% to 53.6%), Kentucky (from 35.1% to 36.5%), and Wyoming (from 45.3% to 46.6%). Conversely, Minnesota and Michigan faced the most significant year-over-year declines, with Minnesota plummeting from 37.6% to 20.1%.

A notable result of this report is the concentration of equity-rich properties in certain states, with Vermont leading at a staggering 78.9% equity-rich homes, followed by Montana (59%) and Rhode Island (54.9%). These areas present potential stability amid swings in other parts of the country.

The Unstable Rise of Seriously Underwater Homes

While the overall percentage of equity-rich homes has decreased, seriously underwater homes (where balances exceed property values by 25% or more) remained stable at 3.2% compared to the previous quarter; however, this is a rise from 2.7% year-over-year. Particularly notable is the sharp increase observed in Minnesota, where the rate jumped to 12.1%, indicating a worrying trend for stakeholders in that market.

This rise in seriously underwater properties suggests that while some markets may be thriving, others are grappling with debt far exceeding property values, which could lead to further destabilization if not addressed.

An Analysis of Metropolitan Areas

Across metropolitan statistical areas (MSAs), the findings are similarly concerning. A staggering 96.3% of the analyzed markets reported a year-over-year decline in the share of equity-rich homes. Major cities like San Jose (at 59.1% equity-rich homes) and New York (54.7%) still showcase solid numbers, yet many major metros like Baton Rouge, LA, and Minneapolis, MN, recorded far less at 15.4% and 16.9%, respectively. The concentration of financial stability is shifting and represents increased risk for areas heavily reliant on residential real estate values.

Disparities in Equity-Rich Rates by County

Counties displayed significant disparities concerning equity-rich homes. For instance, Park County, MT, holds an impressive 94.7% of equity-rich homes, while the lowest rates were found in Saint Bernard Parish, LA, where just 10.8% of homes fall into this category. The geographical inequities in home equity exposure pose a challenge as they may affect the overall economic stability of the regions.

Conclusion

As the U.S. continues to navigate post-pandemic economic realities, the declining share of equity-rich homes is indicative of broader market vulnerabilities. While properties considered seriously underwater have held steady for now, the inconsistent equity performance among states and metropolitan areas necessitates closer examination by policymakers, investors, and homeowners alike. The current landscape suggests a need for proactive measures to protect homeowners against a rising tide of financial instability.

As the situation develops, all stakeholders must remain vigilant, as these dynamics will undoubtedly impact future home buying and investment strategies. Only time will reveal whether these trends stabilize or signal a more profound market correction.