Homeowner Equity Down in Q4, Cotality Reports
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Cotality, Irvine, Calif., found that borrower equity nationwide declined 0.5% year-over-year in Q4 2025.
That’s an average equity decrease of about $8,500 per borrower between Q4 2024 and Q4 2025. Year-over-year in Q3, $13,300 was lost.
The average U.S. borrower now has about $295,000 in accumulated home equity.
“As home price growth has slowed, homeowner equity has largely leveled off, but it remains historically high. Existing mortgage borrowers still control nearly $17 trillion in total equity, with roughly $11 trillion that could be tapped, and those figures have held remarkably steady over the past year. And while borrowers have been relatively timid in tapping the equity, declining borrowing rates could make tapping home equity relatively more affordable in the future,” Cotality Chief Economist Selma Hepp said.
“Looking ahead, muted home price appreciation could limit additional equity gains, and any deterioration in the labor market could pressure household balance sheets, particularly for more recent buyers with thinner equity cushions,” continued Hepp.
Negative equity increased by 15% to 1.1 million homes, or 2% of all mortgaged properties year-over-year. The total number of mortgaged residential properties with negative equity increased by 3.6% to 1.2 million homes, or 2.2% of all mortgaged properties, quarter-over-quarter.
However, negative equity peaked at 26% of mortgaged residential properties in Q4 2009.
The combined national value of negative equity was $366 billion at the end of Q4, up $3.3 billion from Q3 and up $24.2 billion from Q4 2024.
Cotality notes that 185,000 properties would regain equity if home prices rose 5%, but 372,000 would fall into negative equity if prices fell by 5%. The firm expects prices to increase by 4.46% by the end of the year.
The average loan-to-value ratio increased from 44.8% to 45.4%.
By state, home equity growth was strongest in New Jersey (up $26,100 on average), Wyoming (up $23,100 on average), Connecticut (up $20,300 on average), Illinois (up $13,300 on average) and Rhode Island (up $12,100 on average). Florida saw an average decline of $29,400, California saw an average decline of $24,700 and Arizona saw an average decline of $23,900.
