The property outlook for homeowners in the US Deep South state of Louisiana is growing increasingly dire, as it now contends with the nation's most severe mortgage-equity crisis. A new report reveals the state has the highest number of 'seriously underwater' mortgages in the country, where homeowners owe more than their property is worth.
A Deepening Crisis in the Bayou State
According to data from property analytics firm ATTOM, a staggering 11.9 percent of homes in Louisiana had seriously underwater mortgages in the third quarter of 2025. This marks a significant rise from 10.5 percent just one year earlier. This situation is in stark contrast to the national picture, where only 2.8 percent of mortgages were considered seriously underwater in the same period.
A mortgage is defined as 'seriously underwater' when the loan-to-value ratio hits 125 percent or higher. This means the homeowner owes at least 25 percent more than the estimated market value of their property, creating a significant financial trap.
The Perfect Storm of Contributing Factors
Analysts point to a confluence of regional and state-specific issues driving the crisis. Hannah Jones, a senior economic research analyst at Realtor.com, explained that 'softening home prices, easing buyer demand, and lower incomes all contribute to a higher concentration of underwater mortgages in the South compared to other regions.' She added that as market conditions weaken, homeowners find it harder to sell and may struggle to keep up with payments.
In Louisiana, the problem is exacerbated by unique pressures. Andreanecia M. Morris, executive director of the housing non-profit HousingNOLA, highlighted an unprecedented affordability crisis fuelled by insurance and utility costs linked to natural disasters. 'Louisiana is ground zero for the disasters that climate change has wrought across the country,' she told the Daily Mail. 'For the last 20 years, Louisiana homeowners and renters have been battered not just by hurricanes, but extreme weather events that have weakened the housing stock.'
Morris argues that systemic failures in housing investment and recovery have combined with climate impacts to create 'another perfect storm,' leading to mass displacement. Severe weather also prevents owners from making long-term safeguarding improvements to their properties.
National Trends and Localised Pain
While the national rate of seriously underwater mortgages is less dramatic, it is still a concern, rising to 2.8 percent in Q3 2025 from 2.4 percent in 2024. The crisis is heavily concentrated, with several Southern and Midwestern states showing stubbornly high rates. After Louisiana, Illinois, Pennsylvania, and Arkansas also stood out for their proportion of seriously underwater homes.
The distress in Louisiana is intensely localised. The state had five counties (parishes) where 13 percent or more of homes were seriously underwater:
- Calcasieu Parish (home to Lake Charles)
- Rapides Parish (home to Alexandria)
- Ouachita Parish (home to Monroe)
- East Baton Rouge Parish
In total, Louisiana accounted for 14 of the 50 US counties with the highest share of seriously underwater properties. This localised collapse in equity leaves borrowers frozen: unable to sell without a major loss, facing the grim choice of continuing to pay a loan exceeding the home's value, or risking default and foreclosure.
ATTOM's report cautions that these deep regional disparities mean anyone considering refinancing, selling, or moving must be particularly careful. It named California as the nation's riskiest housing market based on factors including affordability and underwater mortgages, while Wisconsin was deemed the least risky, followed by Tennessee, Montana, New Hampshire, and Virginia.
This assessment of Louisiana's leading position in the mortgage crisis comes as the national median home price reached a record $375,000, underscoring the uneven and precarious state of the American housing market.
