Seriously Underwater Properties Rise from Year Ago

ATTOM Data Solutions, Irvine, Calif., said more than 5.2 million U.S. properties remained seriously underwater at the end of the first quarter, up by more than 17,000 properties from a year ago.

The company’s First Quarter U.S. Home Equity & Underwater Report said seriously underwater properties–defined as properties in which the combined balance of loans secured by the property is at least 25 percent higher than the property’s estimated market value–represented 9.1 percent of U.S. properties, up from 8.8 percent in the fourth quarter but down from 9.5 percent from a year ago.

“With home prices increasing at a slower pace in 2018, than in previous years, the potential for people to climb out from mortgages that are underwater or advance into equity-rich territory, tends to be reduced,” said Todd Teta, chief product officer with ATTOM Data Solutions.

Teta noted, however, that despite the uptick in serious delinquencies, only one in 11 mortgages are seriously underwater today, compared to nearly one in three during the depths of the recession. “Although, if the latest trend continues, it will raise another clear signal of a market slowdown, which will be good for buyers, but not so good for sellers,” he said. “But if the pattern of the past few years takes hold–with levels of underwater and equity rich mortgages turning around–it will mean the market remains strong for sellers, with fewer needing to get out from under financial distress.”

(The Mortgage Bankers Association will release its 1st Quarter National Delinquency Survey on Tuesday, May 14. The NDS, conducted since 1953, covers 38 million loans on one- to four- unit residential properties, reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.)

The report said states with the highest share of seriously underwater properties were Louisiana (20.7 percent); Mississippi (17.1 percent); Arkansas (16.3 percent); West Virginia (16.2 percent); and Illinois (16.2 percent). Among 99 metropolitan statistical areas analyzed the highest share of seriously underwater properties were in Baton Rouge, La. (21.3 percent); Scranton, Pa. (20.0 percent); Youngstown, Ohio (19.2 percent); Toledo, Ohio (19.2 percent); and New Orleans (17.8 percent).

ATTOM said states with the highest share of equity rich properties were California (43.0 percent); Hawaii (38.1 percent); New York (34.2 percent); Washington (33.2 percent); and Vermont (32.8 percent). Highest concentration of equity-rich properties in metros were

Among 99 metropolitan statistical areas analyzed in the report, those with the highest share of equity rich properties were San Jose, Calif. (68.3 percent); San Francisco, (58.4 percent); Los Angeles (48.1 percent); Santa Rosa, Calif. (47.6 percent); and San Diego (39.3 percent).