It\u2019s awfully hard to find a property owner in Southern California who owes more on the home than what it\u2019s worth.<\/p>\n
My trusty spreadsheet looked at a Cotality report tracking \u201cunderwater mortgages\u201d for the first quarter of 2026 \u2013 a troublesome situation in which the borrower\u2019s balance owed is larger than the estimated value of their home \u2013 in the 100 U.S. markets with the most mortgages.<\/p>\n
Underwater homeowners have a bad habit of walking away from their mortgages when financial conditions sour, whether due to personal circumstances or broader economic conditions. Widespread underwater loans amplified numerous other real estate problems in the mid-2000s, leading to the Great Recession\u2019s housing crash.<\/p>\n
Early in 2026, Orange County had only 39 underwater home loans for every 10,000 mortgages. That\u2019s the lowest share in the first quarter among those 100 U.S. markets.<\/p>\n
Orange County has 2,300 of these worrisome loans, a group that\u2019s grown 2% in a year.<\/p>\n
Locally speaking<\/p>\n
Here\u2019s how other Southern California housing markets fared in this study, ranked by their national standing:<\/p>\n
\u2013 Ventura County: 58 per 10,000 mortgages underwater, the third-lowest nationally. That\u2019s just 1,100 loans where the amount owed exceeds the home\u2019s value, a group that\u2019s shrunk by 0.2% in the past year.<\/p>\n
\u2013 San Diego County: 61 per 10,000, fourth-lowest nationally \u2013 4,100 loans, off 2.5% in a year.<\/p>\n
\u2013 Los Angeles County: 106 per 10,000, 10th-lowest nationally \u2013 17,200 loans, up 0.8% in a year.<\/p>\n
\u2013 Inland Empire: 107 per 10,000, 13th-lowest nationally \u2013 11,000 loans, off 0.3% in a year.<\/p>\n
The rarity of underwater loans in Southern California can be attributed to stingy lenders, who have been stricter since the Great Recession about who gets a mortgage, and to the region\u2019s stubbornly high home prices, which keep borrowers\u2019 property values intact.<\/p>\n
Region vs. region<\/p>\n
How rare are these problematic loans locally?<\/p>\n
Southern California had a combined 87 underwater mortgages per 10,000. That\u2019s a total of 35,800 loans, a tally that\u2019s dropped 0.2% in a year.<\/p>\n
Contrast that with the six other California markets, with slightly more underwater borrowers: 102 underwater loans per 10,000. That\u2019s 23,400 loans combined, off 5% in a year.<\/p>\n
Note that San Jose had the nation\u2019s second-lowest share of underwater loans, 54 per 10,000 \u2013 that\u2019s 2,100 loans, off 2.1% in a year. And San Francisco was fifth-lowest, 83 per 10,000 or 2,400 loans, off 21% in a year.<\/p>\n
Contemplate that both slices of the Golden State are far better off than the 89 markets in the rest of the U.S., where there were 208 underwater loans per 10,000. That\u2019s 910,000 mortgages, up 0.2% in a year.<\/p>\n
The nation\u2019s highest rate was found in New York\u2019s Long Island \u2013 Nassau and Suffolk counties \u2013 at 669 per 10,000 loans. That\u2019s 53,000 mortgages, off 1.5% in a year.<\/p>\n
Or ponder California\u2019s success this way: The 11 Golden State markets in the top 100 account for 14% of total mortgages outstanding but only 7% of all underwater loans.<\/p>\n
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/a><\/p>\n