Fewer than 60 of every 10,000 mortgages in Ventura County are underwater, a rate so low it ranks third-best in the entire country. Across Southern California, homeowners are sitting on a rare kind of insulation from financial trouble: years of rising home prices and tighter lending rules have kept the region's underwater mortgage numbers near historic lows, even as borrowing costs remain elevated.
The figures come from a first-quarter 2026 report from Cotality, tracked and reported by the San Diego Union-Tribune, which found that Ventura County's underwater loan total fell 0.2% over the past year to just 1,100 loans, or 58 per 10,000 mortgages. An underwater mortgage is defined in the report as one where the borrower owes more than the home is currently worth — the exact dynamic that fueled the mid-2000s housing crash and left borrowers trapped with no equity to fall back on.
Ventura County wasn't alone. Orange County posted the lowest underwater-mortgage share among the 100 U.S. markets with the most mortgages outstanding, with just 39 underwater loans per 10,000 mortgages — 2,300 loans total, even though that figure grew 2% over the year. San Diego County came in fourth-lowest nationally, with 61 underwater mortgages per 10,000, totaling 4,100 loans after a 2.5% annual decline. San Jose ranked second-lowest nationally at 54 per 10,000, with its 2,100 underwater loans down 2.1% year over year.
How Southern California Compares Nationally
Los Angeles County, the region's largest market, had 17,200 underwater loans, or 106 per 10,000 mortgages — a 0.8% increase over the year that still left it ranked 10th-lowest nationally. The Inland Empire, with 11,000 underwater loans and a rate of 107 per 10,000, ranked 13th-lowest, despite seeing its total dip 0.3%. San Francisco, meanwhile, ranked fifth-lowest with 2,400 underwater loans, or 83 per 10,000, after posting the steepest improvement of any major California market — a 21% drop in one year.
Taken together, all of Southern California had 35,800 underwater loans, working out to 87 per 10,000 mortgages, a rate that edged down 0.2% over the past year. Six other California markets not broken out individually combined for 23,400 underwater loans, or 102 per 10,000 mortgages, after a 5% annual decline. By contrast, the 89 other markets tracked nationally that make up the rest of the country carried 910,000 underwater mortgages, or 208 per 10,000 — more than double Southern California's rate — and that national figure ticked up 0.2% over the year even as the region's fell.
The 11 California markets that rank among the top 100 nationally account for 14% of all mortgages outstanding in the country, but only 7% of the nation's underwater loans, according to the report. That imbalance underscores just how much more resilient California mortgages have become compared to the rest of the country. Nowhere was the contrast starker than with Long Island's Nassau and Suffolk counties in New York, which had the highest underwater-mortgage rate nationally at 669 per 10,000 loans — more than 53,000 underwater mortgages total — even after a 1.5% annual decline.
Why Underwater Loans Matter
Underwater loans matter because when financial conditions worsen, owners with negative equity may simply walk away from their mortgages rather than keep paying down a loan larger than what the home is worth, per the Union-Tribune's report from columnist Jonathan Lansner, the Southern California News Group's business columnist. That dynamic amplified real estate problems throughout the mid-2000s and directly contributed to the Great Recession housing crash, when underwater loans piled up nationwide and eventually forced widespread foreclosures.
The report attributes Southern California's low underwater rates to two forces: stricter mortgage lending standards adopted since the Great Recession, and persistently high home prices that have kept building equity for existing owners. Those same forces echo a broader national pattern — during the peak of the 2008 crash in September 2009, roughly 23% of all U.S. homeowner mortgages were underwater, according to Fast Company, compared with a small fraction of that share nationwide today.
The Equity Cushion Behind the Numbers
Much of Southern California's protection traces back to sheer accumulated equity. In the first quarter of 2026, 59.3% of mortgaged homes in Los Angeles County and 58.2% in San Diego County were classified as equity-rich, meaning owners owed 50% or less of their home's market value, per a regional real estate analysis published by ViewSLO Homes. Nationwide, mortgaged homeowners held a combined $17.9 trillion in net home equity as of the first quarter of 2026 — roughly five times what they held 15 years earlier — with the average mortgaged borrower holding $310,500 in equity, according to Cotality, the firm formerly known as CoreLogic.
Post-recession lending reforms also play a role. The Consumer Financial Protection Bureau's Ability-to-Repay and Qualified Mortgage rules, implemented under the Dodd-Frank Act in January 2014, banned no-doc loans and required lenders to verify borrowers' income and debt-to-income ratios before approving a mortgage. Those changes are widely credited with eliminating the high-risk loan products that fueled the previous crash. California borrowers who do fall behind also carry a legal backstop: under Section 580b of the California Code of Civil Procedure, purchase-money mortgages on owner-occupied homes are non-recourse, meaning lenders cannot pursue borrowers for the difference if a foreclosed home sells for less than what's owed.
Elevated mortgage rates are keeping a lid on the housing supply that might otherwise soften prices further. As of mid-2026, about 76% of California homeowners held mortgage rates below 5%, compared with prevailing market rates near 6.5%, according to the California Legislative Analyst's Office. That rate lock-in effect discourages existing owners from selling and buying again at a much higher rate, keeping resale inventory tight and continuing to support home values across the state.
A Small National Warning Sign
Not every trend line is pointing in the same direction. Nationally, the share of mortgages considered seriously underwater — defined as owing at least 25% more than a home's estimated market value — edged up to 3.2% in the first quarter of 2026, compared with 3.0% in late 2025 and 2.8% in early 2025, according to ATTOM. States including Louisiana, at 11.8%, Kentucky, at 8.5%, and Mississippi, at 8.0%, carried by far the highest concentrations of seriously underwater mortgages in the same period, reflecting sluggish price growth and lower incomes in those markets compared with Southern California's stronger equity position.
The national equity-rich mortgage share, meanwhile, has moderated to 43.3% in early 2026 after peaking during the pandemic-era price surge, though it remains well above the pre-pandemic level of 26.5% recorded in early 2020, per ATTOM data distributed through PR Newswire. Recent buyers who purchased at peak prices with smaller down payments remain the most exposed if local economic conditions or regional home prices soften, even as the broader Southern California market continues to outperform much of the rest of the country.
