Cotality has unveiled the 2025 Q2 Homeowner Equity Report (HER), and according to the survey, U.S. homeowner equity gains nationwide are not uniform.
“The average borrower equity is approximately $307,000, representing the third highest figure in recorded history and an increase of $124,000 compared to the first quarter of 2020 at the start of the pandemic,” said Dr. Selma Hepp, Cotality Chief Economist. “Even in markets where recent price declines have pulled down average equity, such as the District of Columbia and Florida, borrowers on average hold almost $350,000 and $290,000 in equity, respectively.”
Year-over-year (YoY), borrower equity fell by $141.5 billion, or 0.8%. As a result of that drop, homeowners with mortgages now have $17.5 trillion in total net equity. However, recent drops are insufficient to erase the gains homeowners have made in prior years.
Even though the decreases are modest, homeowners should be aware of the softening market. Recent equity gains have stagnated after rising $25,000 in 2023 and an additional $4,500 in 2024. In the U.S., homeowners lost an annual average of $9,200 in equity.
Average YoY Equity Gain Per Borrower
Negative Equity Ticks Up Among Stalling Home Prices
The percentage of mortgaged homes with negative equity has risen from 1.7% to 2% annually as a result of those losses. In other words, there are unmistakable signs of difficulties ahead, as an 18% increase in negative equity year over year has forced 175,000 more properties into the group.
On the other hand, the number of properties with negative equity fell by 3.3% when assessed on a quarterly basis. The spring homebuying season, when prices are generally rising, falls during this seasonal improvement.
Nonetheless, the percentage of homeowners with negative equity is getting closer to the historic low of 1.7% set in Q2 2024. Over the coming year, it is doubtful that the percentage of properties with negative equity will move significantly. According to current data, a 5% increase in home prices would result in 144,000 properties gaining equity, while a 5% decline in prices would result in 242,000 properties losing value. By June 2026, however, the Cotality Home Price Index is expected to rise by almost 3%.
National Home Equity Distribution by LTV Segment
“Home prices this year have experienced the slowest rate of growth since the Great Financial Crisis of 2008,” Hepp said. “As appreciation remains modest and even declines in some markets, home equity accumulation is projected to follow suit. With the reduced pace of appreciation, seasonal fluctuations in home prices will have a pronounced impact on equity changes. Recent declines also highlight the benefits of accessible equity as some homeowners leveraging their equity for alternative financial purposes.”
As property values in the Northeast continue to grow steadily, homeowners’ equity continued to increase in:
Connecticut ($37.4K), New Jersey ($36.2K), and Rhode Island ($31.2K) saw the largest gains year over year. In contrast, 32 states posted annual equity losses. The top three states to lose equity were the District of Columbia ($-34.4K), Florida ($-32.1K), and Montana ($-26.9K).
Negative Equity Share for Select Metropolitan Areas
Data on homeowner equity at the metropolitan level is provided by Cotality. Los Angeles, San Francisco, and Las Vegas are the least affected, despite the fact that negative equity has increased nationwide.
In markets where house prices have dropped or where there have been more natural disasters that have destroyed borrowers’ equity, such as McAllen, Texas; Shreveport, LA; Cape Coral, FL; and Ocala, FL, there have been significant increases in negative equity shares.
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