---
title: Homeowners' Equity Cushion Has Thinned for a Full Year
description: The share of U.S. homes with at least 50% equity fell to 41.1% in Q2 2026, a fourth straight quarterly drop and the lowest in nearly five years.
author: Darie Nani (Editor-in-Chief)
updated: 2026-08-20T19:13:30.423Z
canonical: https://richdadmagazine.com/article/home-equity-cushion-thins-five-year-low
image: https://cdn.nanimediahouse.com/home-equity-cushion-thinning-183097.webp
categories: Real Estate
content_type: News
region: United States
publication: Rich Dad Magazine
schema_type: Article
---

For most of the past few years, a father who owned his home could watch the family's biggest asset do quiet work in the background: prices climbed, mortgage balances shrank against them, and the gap between what the house was worth and what was owed grew into a real cushion. That cushion is now thinning. ATTOM's second-quarter 2026 report on U.S. home equity puts the share of "equity-rich" homes, where the owner holds at least half the value free and clear, at 41.1 percent. It was 43.3 percent in the first quarter and 47.4 percent a year earlier. Four quarters in a row have moved the same direction.

This is a softening, not a collapse. More than four in ten homeowners still sit on very large equity, and the reading remains healthier than it was before 2020. What changed is the trend line. After a long stretch of building, the family's home-equity buffer has started to give back some of its peak.

Rob Barber, ATTOM's chief executive, put the two-sided nature of it plainly.

> "These two measures of home equity strength, the rates of equity-rich and seriously underwater homes, remain healthier than they were prior to 2020. However, both have been moving in less favorable directions over the past year, suggesting a trend worth watching."
> — Rob Barber, CEO of ATTOM

## California and Washington Saw Some of the Steepest Drops

The national figure is an average of very different local pictures. Over the past year the equity-rich share rose in only four states: North Dakota, South Dakota, Kentucky and Wyoming. Almost everywhere else it fell. In California, the share of homes with at least half their value in equity dropped from 56.9 percent a year earlier to 45.6 percent. In Washington, it went from 52.4 percent to 43.2 percent. Those are two of the largest annual declines in the country, and they land in exactly the kind of higher-priced markets where a household's home carries the most weight on the family balance sheet.

The pullback reached deep into metro areas too. The equity-rich share fell from the prior quarter in 73 of the 108 metros ATTOM tracks, and it fell over the year in 104 of them. A handful of states still run high, with Vermont at 78.9 percent, Montana at 59 percent and Rhode Island at 54.9 percent, so plenty of owners remain well cushioned.

Some of the sharpest state swings need a plain footnote. ATTOM says it changed this report's methodology to exclude investor activity, cases where one large loan covers multiple properties, so the figures better reflect ordinary consumer home buying. Minnesota's equity-rich share, for instance, reads as a fall from 37.6 percent to 20.1 percent, but part of that year-over-year move reflects how ATTOM now counts rather than the market alone.

## Few Owners Are Underwater, and That Group Is Still Small

The other side of the report is more reassuring. A home is "seriously underwater" when the owner owes at least 25 percent more than it is worth, and that share was 3.2 percent in the second quarter. It held steady from the first quarter and is up only modestly from 2.7 percent a year earlier. Roughly one home in 31 falls into that category, a long way from the kind of distress that defined the last housing downturn.

That share did creep up in more places than it fell, rising in 18 states from the prior quarter and in 33 states plus Washington, D.C., over the year. For a father who bought recently, put little down, or lives in a market where prices have eased, it is worth knowing which side of the line the house sits on. For most owners the answer is comfortable, and the equity is still there. What the report describes is a cushion coming down from a very high peak, not a wave of households sliding beneath their loans.

## FAQ

**Q: What does "equity-rich" actually mean?**
ATTOM counts a home as equity-rich when the loans against it are no more than half its estimated market value, so the owner holds at least 50 percent of the home free and clear. It is a deliberately high bar, well above simply having positive equity, which is why a national share above 40 percent still points to broad strength.

**Q: Is 41 percent historically a bad number?**
No. ATTOM notes both this measure and the underwater rate remain healthier than they were before 2020. The concern is direction rather than depth: 41.1 percent is the lowest equity-rich share in nearly five years and the fourth straight quarterly decline, so the story is a buffer that has been shrinking, not one that has run out.

**Q: What counts as a "seriously underwater" home?**
It is a home where the owner owes at least 25 percent more than the property is worth, which is a much higher bar than simply having slightly negative equity. The 25 percent threshold is meant to flag genuine distress rather than the ordinary dip that can follow a soft patch in local prices.

**Q: Should a rising underwater rate worry me if I am not selling?**
Equity on paper only becomes a hard problem when you have to act on it, such as selling, refinancing or borrowing against the house. An owner who is staying put and paying the mortgage keeps chipping away at the balance and rebuilding equity over time. The figures are most useful as a read on your options if plans change, and for most households the cushion is still intact.