Underwater Homeowners Surge in 30 Sunbelt Markets – Latest Data

Underwater Homeowners: National Snapshot

As home prices retreat in parts of the West, Southwest and Southeast, the share of underwater homeowners remains modest nationally but spikes in several Sunbelt metros. ICE Mortgage Technology reports that ↓ 1.5% of all U.S. mortgages were underwater at the end of May 2026, up from 1% a year earlier. By contrast, September 2009 saw 23% of mortgages underwater, according to Cotality/FirstAmerica. Why the gap? National home values still hover near historic peaks, and many borrowers locked in 2‑3% fixed rates during the pandemic boom, accelerating principal pay‑down. Nearly half of all loans (49.9%) still carry rates below 4%, creating an equity buffer. Moreover, only a small slice of owners in correction markets such as Austin or Cape Coral bought at the 2022 apex, limiting exposure.

Top Ten Markets with Highest Underwater Rates

Cape Coral‑Fort Myers, FL – ↑ 11.1%; Lakeland, FL – 7.8%; San Antonio, TX – 7.7%; Austin, TX – 6.6%; North Port, FL – 5.3%; Jacksonville, FL – 4.1%; Tampa, FL – 4.0%; Baton Rouge, LA – 3.5%; Dallas, TX – 3.5%; Deltona, FL – 3.0%.

Lowest Underwater Shares

Bridgeport, CT – 0.1%; San Jose, CA – 0.1%; Boston, MA – 0.2%; Los Angeles, CA – 0.2%; Hartford, CT – 0.2%; Madison, WI – 0.3%; Grand Rapids, MI – 0.3%; Oxnard, CA – 0.3%; New Haven, CT – 0.3%; New York‑Newark, NJ – 0.3%.

“Even in the hardest‑hit metros, the underwater rate is a fraction of the post‑2008 crisis peak,” notes analyst Lance Lambert.

Recent vintages (2022‑2025) bear the brunt, especially thin‑equity FHA and VA borrowers. Should price pullbacks persist, the underwater share could creep higher, but a spike comparable to 2009‑10 appears unlikely. For broader market context, see Reuters analysis of housing trends.