Bought a home between 2022 and 2025? You could be most vulnerable to this housing market shift

Key Takeaways:

• The share of equity-rich U.S. homes has declined for four straight quarters.
• Vermont leads all states with 79% of mortgaged homes in equity-rich territory.
• At 3.2%, the seriously underwater rate is holding steady overall, though it’s higher in some states.
• Minnesota’s equity-rich share fell drastically from 38% to 20%.
• Buyers from 2022 to 2025 could be most exposed to continued shifts in home equity.

Equity Slips for the Fourth Quarter

The share of U.S. homes with mortgages that qualify as “equity-rich” slipped to 41% in the second quarter of 2026, down from 43% in the previous quarter and 47% a year ago. For the purposes of this analysis, a home is considered equity-rich if the remaining mortgage balance is no more than half of the property’s estimated market value.

This marks the fourth consecutive quarter that the equity-rich share has declined, reflecting a potentially uneasy time for recent homeowners. While the rate remains stronger than before 2020, the steady drop is fueling concerns about whether the housing market can maintain its footing.

State-by-State Highlights

Regional results vary widely. Vermont leads the nation with a remarkable 79% of mortgaged properties deemed equity-rich. North Dakota and South Dakota also posted notable gains or stable equity levels, with North Dakota alone seeing an increase of nearly three percentage points into 2026.

In contrast, many states are experiencing the opposite trend. Minnesota, for example, saw equity-rich homes fall from 38% to 20% over the past year — a striking dip that raises eyebrows about underlying market forces. Michigan, California, Washington, and Missouri each saw double-digit declines as well.

Mounting Underwater Concerns

Despite the overall proportion of seriously underwater homes staying at 3.2%, the metric is on the rise across numerous states. In Minnesota and Louisiana, more than one in every ten mortgaged properties falls into this category, meaning the homeowner’s loan balance exceeds the home’s market value by 25% or more.

Moreover, 33 states reported a year-over-year increase in seriously underwater homes, underscoring growing risks. Analysts note that although these numbers are still healthier than pre-2020 levels, the movement in a less favorable direction hints at possible financial pressure on recent buyers.

Recent Buyers at Greater Risk

According to the data, those who purchased their homes between 2022 and 2025 may be more vulnerable to shifting home values. The fact that large numbers of homeowners bought at potentially elevated prices suggests that slight market corrections could affect these loans disproportionately.

Rob Barber, CEO of property data firm Attom, described the situation as worth close monitoring. “These two measures of home equity strength, the rates of equity-rich and seriously underwater homes, remain healthier than they were prior to 2020,” Barber said in the report. “However, both have been moving in less favorable directions over the past year, suggesting a trend worth watching.”

Looking Ahead

The national housing market remains dynamic. While some regions continue to thrive, several states face increasing numbers of homeowners at risk of owing more on their mortgages than their homes are worth. Old market adages about location still hold, yet recent declines in equity-rich status underscore how quickly the landscape can shift.

Table: Equity Trends by Selected States

Industry watchers will be tracking further fluctuations closely. Homeowners — especially those who purchased in the last few years — should remain vigilant about how these trends might affect their property values and mortgage obligations.