Brief excerpt:
Negative Equity Rates Have Increased
• Negative equity rates, after years at record lows, have risen slightly toward more typical levels
• As of Q4, 875K mortgage holders (1.6%) owe more on their homes than they are worth, the highest rate in three years but comparable to pre-COVID levels and long-term averages outside the Great Financial Crisis
• The share of borrowers with limited equity has also increased, reaching 6.9% in September ‒ the highest since mid-2020 but still below long-term averages
…
• While overall negative equity rates remain low, certain markets are showing signs of concern, particularly in the Gulf Coast of Florida and Austin, Texas
• In Cape Coral, Fla., where home prices have dropped 15% from their peak, 11% of mortgages are underwater, including over one-third of those originated in 2023 and 2024
• In Austin, with prices down 21% from their highs, nearly 7% of mortgages are underwater, including about 25% of loans from 2022 and over 15% from 2023 and 2024
• Borrowers with low down payment FHA/VA loans in these areas face even higher negative equity rates, exceeding 60% in some cases
• In contrast, markets like Bridgeport, Hartford, New Haven (Conn.), San Jose, Los Angeles, Boston, and New York City, which have resilient home prices and larger down payments, have virtually no negative equity
emphasis added
There is much more in the article.