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The phrase "are underwater" is correct and usable in written English.
It can be used to describe a situation where something is submerged in water or to metaphorically indicate a state of financial loss or difficulty.
Example: "Many homeowners are underwater on their mortgages due to the decline in property values."
Alternatives: "are submerged" or "are in the red."
Dictionary
are underwater
adjective
Beneath the surface of the water, or of or pertaining to the region beneath the water surface
Exact(60)
"Immense areas are underwater.
"These cables are underwater.
"We know their farms are underwater".
Their reputations right now are underwater.
About 10.7 million mortgage holders are underwater.
In real estate parlance, they are underwater.
"So we are underwater," Stewart said.
About a fifth say their mortgages are underwater.
Equity payouts from 2010 are underwater, in many cases.
More assistance for homeowners who are underwater on their mortgages.
In Arizona and Florida, about half the owners are underwater.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com