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Since the Pandemic Housing Boom fizzled out in the summer of 2022, some overheated parts of the country—particularly in the West, Southwest, and Southeast—have experienced home price declines from their peak (see this map). While many of these markets have seen only modest drops, a few metro areas, such as Cape Coral and Austin, have undergone what I’d consider “material” home price corrections, falling -19.1% and -27.8%, respectively, from their peaks.
These regional home price declines raise the question: How many mortgage borrowers are actually “underwater” right now?
To find out, ResiClub once again reached out to ICE Mortgage Technology—formerly known as Black Knight, before it was acquired by Intercontinental Exchange for $11.8 billion in 2023.
2.1% —> The share of outstanding U.S. homeowner mortgages with negative equity* (i.e. underwater) at the end of December 2025, according to data from ICE Mortgage Technology provided to ResiClub this week. Back in December 2024, that figure was 1.3%.
23.0% —> The share of outstanding homeowner mortgages with negative equity (i.e. underwater) at the end of September 2009, according to Cotality/FirstAmerica.
Why, on a nationally aggregated basis, are there still not many homeowners underwater despite home price declines in some markets?
- Nationally aggregate existing home prices are still pretty close to all-time highs. While many pockets of the West, Southwest, and Southeast have seen home prices decline at least some from their Pandemic Housing Boom peak, nationally aggregated single-family prices are still pretty close to all-time highs.
- Amortization of ultra low mortgage rates. Many homeowners locked in ultra-low mortgage rates during the Pandemic Housing Boom. With fixed rates around 2% to 3%, those monthly payments included a larger proportion of principal repayment from the start. That means borrowers have been paying down their balances more aggressively than they would under higher-rate loans. As of Q4 2025, 51.5% of outstanding mortgage holders still have rates below 4.0%, which has helped some borrowers build equity faster and give them a greater buffer.
- Few buyers actually purchased at the peak in correction markets. Even in boom-to-correction markets like Austin, TX or Cape Coral, FL, only a small share of homeowners bought at the absolute top of the market in spring 2022. Most current homeowners in those areas either bought before the peak. This limited exposure at the peak helps explain why negative equity, so far, hasn’t been a big problem, even in some of the hardest-hit metros.
While only 2.1% of outstanding U.S. homeowner mortgages have negative equity, there are a few pockets where that share is approaching 10.0%—or has even slightly exceed it.
Among the 100 major metro areas for which ICE Mortgage Technology provided data to ResiClub, these 10 metros have the highest share of homeowner mortgages currently underwater:
- Lakeland-Winter Haven, FL —> 10.8%
- Cape Coral-Fort Myers, FL —> 10.1%
- Austin-Round Rock-Georgetown, TX —> 9.2%
- San Antonio-New Braunfels, TX —> 8.8%
- Jacksonville, FL —> 6.3%
- North Port-Sarasota-Bradenton, FL —> 6.0%
- Colorado Springs, CO —> 5.6%
- Tampa-St. Petersburg-Clearwater, FL —> 5.4%
- Baton Rouge, LA —> 3.8%
- Deltona-Daytona Beach-Ormond Beach, FL —> 3.7%
- Palm Bay-Melbourne-Titusville, FL —> 3.7%
- Dallas-Fort Worth-Arlington, TX —> 3.5%
- New Orleans-Metairie, LA —> 3.4%
- Orlando-Kissimmee-Sanford, FL —> 3.3%
- Little Rock-North Little Rock-Conway, AR —> 3.3%
Even in markets like Cape Coral (10.1%) and Austin (9.2%) that have higher shares of outstanding homeowner mortgages that are currently underwater, that’s still far off from the levels seen at the height of the GFC era bust. For comparison, back in September 2009 a staggering 68% of mortgage borrowers in Nevada, 48% in Arizona, and 45% in Florida were underwater.
So far, in the down markets, it’s really just the 2022, 2023, and 2024 vintages being impacted (for evidence, look at this chart we made last summer).
Big picture: If home prices in parts of the Southwest, Southeast, and West continue to experience mild home price pullbacks, the share of recent borrowers who are underwater in those markets will rise beyond the levels we’ve outlined today. However, barring a major downward shift, it still wouldn’t anytime soon come close to the depths of negative equity seen in 2009 or 2010.