Nearly 31% of trade-ins carry negative equity in 2026. Here is what the latest auto industry data means for car owners in Portland and Vancouver.
The numbers coming out of the auto industry right now tell a complicated story, and most car owners are not seeing the full picture.
On the surface, the used car market looks healthy. Prices are up. Wholesale demand is strong. Dealers are buying aggressively. But underneath those headline numbers, a growing share of American car owners are carrying debt on their vehicles that quietly erodes the value of the asset they think they own. And the longer that goes unaddressed, the more it costs them.
Three data points in particular define where the market stands right now. Together, they explain a lot about what is happening with vehicle values, why used inventory remains structurally tight, and what it means practically for anyone thinking about selling or trading in.
This is the number that has surprised even veteran industry analysts. According to Edmunds’ Q1 2026 Insights Report, 30.9% of trade-ins toward new-vehicle purchases carried negative equity in the first quarter of 2026. That is the highest share of underwater trade-ins for any quarter on record since early 2021, and the trend has been climbing steadily since 2022.
The average amount owed on those underwater trade-ins reached $7,183, the highest ever recorded for a first quarter and the second-highest quarter on record overall. That figure is up 42% compared to the same period five years ago. And the downstream consequences of rolling that debt forward are significant: buyers who carried negative equity into a new loan in Q1 2026 averaged a monthly payment of $932, which is $159 more than the typical car buyer pays every month. That gap compounds over the life of the loan.
JD Power’s automotive forecast for March 2026 puts the figure at 30.5% of trade-in buyers underwater, per CNBC’s reporting, and notes that the share has grown by 4.2 percentage points in just one year. Edmunds’ consumer insights analyst Joseph Yoon has been direct about what is driving this: ‘It’s the amount underwater that is the real, and troubling, story.’ When negative equity gets rolled into the next loan, the cycle reinforces itself. Higher balances lead to longer terms, longer terms slow equity growth, and slower equity growth means more debt carried into the purchase after that.
The practical implication for sellers is more significant than it might seem. If you are carrying a balance on your current vehicle and you wait too long to sell, you may find yourself in that category. Acting while your vehicle still holds strong market value is the most direct way to avoid entering that cycle or deepening it if you are already in it.
The average age of cars and light trucks on U.S. roads hit a record high of 12.8 years at the start of 2025, according to S&P Global Mobility data reported by Clark.com, reflecting the sixth consecutive year of increase in the average vehicle age. That trend has continued into 2026, pushed higher by the same forces that have defined the post-pandemic market: stubbornly high new car prices, elevated interest rates making financing less accessible, and a structural reduction in new vehicle sales that has kept younger cars from entering the fleet at historical rates.
This matters for the used car market in a specific way. Older vehicles on the road mean more owners sitting on vehicles they bought several years ago, often before the market shifted, and potentially unaware of how their vehicle’s value has changed in the current environment. Some of those owners are pleasantly surprised. A well-maintained truck or SUV purchased in 2020 or 2021, before prices peaked, may have retained considerably more value than the owner expects. Others are in the opposite position, carrying loan balances that have outpaced their vehicle’s depreciation curve.
The aging fleet also has a secondary effect on supply. When owners hold onto vehicles longer, fewer trade-ins enter the market. Carfax’s June 2026 Used Car Price Index notes directly that leasing hit its low point in 2022, meaning fewer high-quality, low-mileage certified pre-owned vehicles are returning to market now, further tightening an already constrained used supply pipeline. That supply constraint is one of the primary forces keeping used car prices elevated, which in turn benefits sellers who are ready to move.
The used car inventory shortage is not a temporary disruption. It is the product of decisions made across multiple years that are now showing up simultaneously in the market. Edmunds’ Q1 2026 used car market report projects that off-lease volumes will rise 25.7% in 2026, adding nearly half a million units compared to last year. That sounds like relief, but context matters: leasing rates in Q1 2026 are running at nearly identical levels as 2025’s depressed 20% mark, meaning the pipeline feeding future lease returns remains thin. Without a significant shift in automaker incentives toward leasing, the industry may remain in a structurally tight inventory state well into 2027.
Cox Automotive’s chief economist Jeremy Robb described the current dynamic plainly in April: used vehicle demand is healthy and inventory levels are relatively tight, with days’ supply falling below 40 in March, the lowest point of 2026 and down from a year ago. The Manheim Used Vehicle Value Index, the most widely tracked measure of wholesale used car pricing in the country, increased 6.2% year over year in its most recent reading. That is not a blip. It reflects sustained pressure from real supply and demand conditions.
For sellers, the implication is straightforward. CarEdge’s spring 2026 market analysis describes the used market as tilting clearly toward a seller’s market, with tight inventory, rising prices, and high financing costs all working against buyers and in favor of anyone with a desirable vehicle to sell. That tilt is real, but it will not hold indefinitely. As lease volumes gradually normalize and new car sales recover, used inventory will slowly rebuild, and the pricing pressure supporting current values will ease.
The national data reflects conditions that are particularly pronounced in the Pacific Northwest. Portland and Vancouver consistently run above the national average on gas prices, which shapes buyer preferences toward fuel-efficient and AWD-capable vehicles. Dealers serving this market have specific inventory needs that do not always align with what the broader national market is chasing, and that creates both opportunities and gaps depending on what you drive.
If you are carrying a loan balance on a vehicle you have been thinking about selling, the first question worth answering is whether you are above or below water. If your vehicle’s current market value exceeds what you owe, you are in a position to benefit from today’s elevated pricing. If you are approaching parity or already underwater, acting sooner rather than later gives you the best chance to exit that position before depreciation catches up with the balance.
If you own a vehicle free and clear, the current environment is straightforwardly favorable. Dealers are competing for inventory, prices are elevated relative to recent history, and the structural conditions keeping prices firm are present now in a way they may not be in 12 to 18 months.
One thing the negative equity data makes clear is that a significant share of car owners are making consequential financial decisions based on a single trade-in offer from a single dealership. That offer is not a market price. It is one dealer’s assessment of what your vehicle is worth to them on that day, shaped by their inventory position, their margin targets, and the national pricing guides they use as a floor.
At CarSolve, your vehicle is presented to a network of dealership buyers across Portland, Vancouver, Salem, and Beaverton who compete against each other in real time. The difference between one offer and five competing offers can be several hundred to several thousand dollars depending on the vehicle, and in a market where one in three trade-ins is already carrying negative equity, that gap matters.
The platform is free to use from start to finish. You receive a free appraisal and a free vehicle history report, and the $249 fee only applies if you choose to accept an offer. Over 1,600 completed transactions and more than 340 five-star Google reviews from sellers across the Portland and Vancouver metro area reflect what that process actually looks like in practice.
Whether you are above water, below it, or not sure, a free appraisal is the fastest way to get an accurate picture of your vehicle’s current market value.
Start your free appraisal today at carsolve.com/sell-my-car/ and get the most out of your vehicle this Spring season.
If you are a business owner in the area and are interested in partnering with us, or a potential customer looking to sell your vehicle for the most money, give us a call at (360) 718-7424 today or click the button below.
