America’s Homeowners Have Never Been Richer. Some Recent Sun Belt Buyers Are Underwater
Homeowners in the U.S. now hold unprecedented equity, yet a rising number of recent buyers in Sun Belt states owe more than their homes’ value. Market conditions vary widely in places like Texas and Florida, showing a split between long-term wealth and recent financial vulnerability.
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American homeowners have accumulated more housing wealth than ever. That record, however, hides a smaller but rapidly growing group of owners who owe more than their homes are currently worth.
Mortgage-holder equity reached $18 trillion during the second quarter of 2026, according to the latest ICE Mortgage Monitor. About 47.5 million homeowners have a combined $11.7 trillion in tappable equity—the amount that could generally be borrowed while retaining a 20% stake in the property. That works out to approximately $212,000 per borrower.
At the other end of the market, about 813,000 mortgage holders are underwater. That number has climbed 44% in one year, with the greatest exposure among people who bought from 2022 through 2025 using government-backed FHA or VA loans.
The divide is particularly visible in Texas and Florida, two of the states most closely associated with the pandemic-era migration and housing boom.
The purchase date matters
Being underwater does not necessarily mean a homeowner is behind on payments or facing foreclosure. It means the outstanding mortgage balance exceeds the home’s estimated market value.
For an owner who intends to stay, the difference may remain largely theoretical while monthly payments continue. It becomes a practical problem when a job change, divorce, family need or financial setback requires a sale. Selling may then require the homeowner to bring money to the closing table or seek approval for a short sale.
Recent buyers are more vulnerable because they have had little time to reduce their balances or benefit from long-term appreciation. FHA and VA mortgages can also require relatively small or no down payments, leaving borrowers with less protection when prices retreat.
Someone who bought in 2015 may still possess substantial equity even after a modest price decline. Someone who bought near the 2022 or 2023 peak could face a loss after a much smaller movement.
That is how one housing market can produce record national wealth and growing financial vulnerability at the same time.
Texas illustrates the correction
Texas home prices remained below their year-earlier level in June for the 13th consecutive month, according to the Texas Real Estate Research Center at Texas A&M University.
The statewide decline was modest—0.4%—but conditions varied considerably by metro area. Austin prices were down 2.2% from a year earlier, while San Antonio’s decline approached 2%. Dallas-Plano and Houston were closer to stabilizing.
The statewide median sales price was $342,900 in June, down from $350,000 a year earlier. Homes also spent an average of 62 days on the market, while properties still unsold at the end of the month had been listed for about 90 days.
None of those numbers suggests a broad collapse. Sales were rising, inventory remained relatively balanced and the rate of price decline was easing. But homeowners who bought recently with little money down do not need a crash to lose their equity. A mild correction can be enough.
Florida is recovering unevenly
Florida’s statewide numbers have recently improved. Existing single-family sales rose 5.1% in July from a year earlier, and the median price increased 3.7% to $425,000. Condo and townhouse sales rose 11%, while their median price held at $295,000, according to Florida Realtors.
Local conditions remain far less uniform. Most major Florida metros entered the summer with more homes for sale than they typically carried before the pandemic. Lakeland’s inventory was 69% above its 2017-to-2019 norm in May, while Orlando’s was 41% higher.
Those added choices have helped buyers but weakened the position of some recent owners, particularly in places where pandemic demand pushed prices rapidly upward before mortgage rates, insurance costs and affordability pressures cooled the market.
Higher-priced buyers are experiencing a different Florida altogether. Sales above $1 million have risen sharply this year, aided by purchasers who can pay cash, make larger down payments or draw upon wealth from other homes and investments.
This is not another 2008—at least not now
The increase in underwater mortgages deserves attention, but it does not amount to a new foreclosure crisis.
Most homeowners retain considerable equity, distressed properties remain scarce and bank-owned homes account for only a small portion of the market. Even in Texas and Florida, sales and prices are showing signs of stabilization rather than uncontrolled decline.
The more consequential development may be a two-tier housing economy.
Longtime owners possess wealth that can help finance renovations, education, retirement or another home purchase. Many recent buyers, meanwhile, entered the market at elevated prices, accepted higher monthly payments and began with thinner equity cushions.
For them, the question is no longer simply whether home prices rise. It is whether they can remain in place long enough for equity to return.
If you’ve been following growth and change around here, these stories are worth a look too.
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Good Friend Mortgage
Good Friend Mortgage has spent 21 years turning hopes into homes. With unmatched service, expert guidance, and a dedication to your future, we make...
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