Home equity dips $4K as prices slow, costs climb
Home equity shifts varied widely by location, with some states experiencing gains over $30,000 while others had losses around or greater than that amount.
A new report shows the slowdown in the housing market is starting to have an impact on overall home equity.
Cotality — formerly known as CoreLogic — found in its Homeowner Equity Report covering the first quarter of 2025 that the average U.S. homeowner with a mortgage lost around $4,200 in equity in the past year. The share of homeowners with negative equity — those who owe more than the value of their house — has also started to increase but remains below pre-pandemic levels.
Negative equity slowly climbing: The share of homeowners with negative equity has been rising each quarter since this time last year, according to Cotality's report. About 2.1% of homeowners with a mortgage had negative equity in early 2025, up from 1.7% in the second quarter of 2024.
Despite the slight uptick, this share is still below pre-pandemic levels, which were around 3.6%, and far below the peak during the Great Recession, when negative equity hit 26% in the fourth quarter of 2009.
However, negative equity could rise or fall quickly with mild home price changes. If home prices dropped 5%, the report estimated more than 250,000 homeowners would fall into negative equity. If prices rose 5%, around 150,000 homes would regain their equity.
Large regional differences in gains, losses: Changes in equity varied across the country in early 2025. The biggest drop occurred in Hawaii, where the average homeowner lost $65,900 in equity in the past year. Washington, D.C., was next (down $29,600), followed by Florida (down $26,300). In contrast, Rhode Island homeowners had the biggest average home equity gain of $36,500 for the same period, with New Jersey close behind at $35,700.
"Geographical differences are important here as the national average is being pulled down by weakening markets in the South — particularly in Texas and Florida — that are masking strong equity growth in the Northeast," said Selma Hepp, chief economist at Cotality, adding that rising insurance and taxes combined with more natural disasters may lead to further declines in the South.