A wealth of economic factors have caused certain states to make the dubious list of negative equity distribution. Nothaft pointed to Oklahoma and Louisiana as two markets where economies rely heavily on the energy sector, primarily oil and gas.

“Until recently, energy prices were way down because demand was way down,” he said. The pandemic forced more people to stay home, the economist observed, which led to lowered gas demand – along with widespread layoffs in oil production and exploration. “Oil prices are way up now, but that affected employment and job creation during the economic recovery.” 

Other vulnerable spots simply haven’t seen the kind of economic growth as other regions, the economist said. Some areas have fallen short of the national index of 18% in terms of home value increases, Nothaft said. Take the state of Louisiana: “Home prices are up about 9.7% over the 12 months – from October 20, 2020, to October 20, 2021 – which is pretty good,” the chief economist noted, “but pales in comparison with other states.”

For instance, in Texas – where it’s often been said that everything is bigger – home value prices were up 17.9%. That’s a hair shy of the 18% barometer that serves as CoreLogic’s national index.

Beyond the abstraction of numbers, negative equity statistics point to the possibility of financial exigencies on the horizon in certain markets, the economist agreed. “Areas that do have a higher negative equity are also more likely to see some of those loans go into a distressed sale situation like foreclosures.”