Why underwater loans don't equal foreclosures

This could be the most encouraging sign for the housing market in years. It’s the final month of 2025, and the housing market has flipped from this time last year. Real prices are down, mortgage rates are near a percent lower, inventory is stabilizing, and affordability…it’s actually improving. But hints at a wave of underwater mortgages are making people nervous. With the number rising, is this the “distress” signal many have been waiting for?

We’re getting into it all: home price, mortgage rate, and inventory updates, plus a new seller trend that is causing serious confusion, and could be the final nail in the “housing market crash” coffin. With sellers doing what nobody expects, next year could get interesting.

More homeowners are falling “underwater” on their mortgages. Is this a 2008 repeat or just a blip on the real estate radar? Some economists are worried about rising delinquencies, but a high-level view of the data could point to an entirely different conclusion.

In This Episode We Cover

Sellers do what nobody expects, and it’s killing the “crash” narrative

Underwater mortgages are surging, but are homeowners really in danger?

The best news we’ve had in three years? A massive win for housing affordability

Mortgage rate momentum and whether now is the right time to refinance

The key affordability improvements we’ve seen since the start of 2025

And So Much More!

Links from the Show

Join the Future of Real Estate Investing with Fundrise

Join BiggerPockets for FREE

Property Manager Finder

BiggerPockets Real Estate 1207 - 2026 Mortgage Rate Predictions: This “X Factor” Could Change Everything

Redfin Housing Market Data

Mortgage Monitor

MarketWatch: Nearly 900,000 homeowners are underwater on their mortgage

Dave's BiggerPockets Profile

Grab Dave’s Book, "Real Estate by the Numbers"

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