Water Wall Paint Damage
This kind of wall damage is normally the direct cause of
a water leak. Now is when you're going to have to put your home
detective Caps on and figure out where the water is coming from.
If you're living in a two-story house and this wall is located under a bathroom or laundry room, this would be the first area that I would inspect, looking for any leaking pipes, fixtures or water hoses.
If there isn't anything above the damaged area, it's probably going to be your roof.
Before you repair the wall damage, I would recommend that you find where the water is leaking from and repair it. Make sure that you repair the water leak properly, or you could find yourself with the same damage in the near future.
Let me give you an example: You have a water damaged wall in your home, like the picture above and you notice that the skylight is leaking and has damaged your ceiling and your walls. You put some silicone caulking around the skylight and this seems to have repaired the water leak. You don't rush to fix the wall damage, until it has rained a few times and now you know for sure that you have repaired the area where the water was leaking from.
Here's the bad news, sometimes you're home repairs will be temporary. The caulking or other repair product, could separate from the roofing or skylight, allowing water to damage the area that you just repaired. If you don't fix the area correctly, you could end up repairing your walls and ceilings a second time.
Sometimes your roof repair that was made in the winter, can become damaged during the summer as your roofing materials start to heat up. Excessive heat can cause adhesives to separate and crack.
I'm only saying this, because I've been there myself.