【Epoch Times News on December 13, 2025】
The majority of the time this year, house prices in the United States have been falling, with the gains of previous years almost completely offset by this downturn. Homeowners’ home equity is shrinking. According to the latest report from the real estate ecosystem data analytics company, Cotality, in the third quarter of this year, the net worth of American homeowners decreased by 2.1% compared to the same period last year, totaling approximately $373.8 billion.
For the average homeowner, the decline in net worth in the third quarter means an average loss of about $13,400 per household. At the same time, the number of homes in a negative equity position, meaning the value of the homes is lower than the balance of the mortgage, has increased by 21% from the same period last year, reaching 1.2 million units.
Selma Hepp, Chief Economist at Cotality, stated: “As the pace of house price growth slows down and various markets readjust from the pandemic peak, we are seeing a significant shift in net worth trends. The proportion of homes in negative equity is increasing, partly due to inadequate purchasing power, leading many first-time buyers and low-income buyers to rely on additional loans or extremely low down payments to repay their mortgages, resulting in high leverage.”
Homeowners with negative equity mostly purchased their homes in recent years when house prices and mortgage rates were high. In addition, in the past few years, as house prices soared, the home equity on homeowners’ books increased rapidly, leading many to extract some of their equity through “home equity loans” or “cash-out refinancing.” However, when house prices start to decline or stagnate, the previously extracted equity is no longer in the property, resulting in less remaining equity and lower buffer space.
According to the S&P Cotality Case-Shiller National House Price Index, current house prices are approximately 52% higher than in January 2020. Even with the rapid increase in mortgage rates in 2023, homeowners still had an average net worth increase of around $25,000 that year; the average increase in 2024 dropped to $4,900.
In addition, there are significant differences in the housing market in different regions. Cotality pointed out that markets such as Boston, Chicago, and New York are still experiencing an upward trend in home equity, while Los Angeles, San Francisco, Washington DC, Miami, and Houston, Texas are among the leaders in declining net worth nationwide.
Hepp stated that the future performance of high-leverage mortgages will depend on the stability of the U.S. economy and job market. “Even though the market generally expects house prices to continue to rise and the economy to remain resilient, we still need to closely monitor the risks of high-leverage loans in the coming months.”
