The Pendulum Swings Back: Homeowners 4X Likely to be Equity-Rich than Seriously Underwater
In another sign of the times that the housing market—and homeowners—have largely recovered, ATTOM Data Solutions, Irvine, Calif., said equity-rich properties now outnumber seriously underwater properties by a four-to-one margin.
The company’s fourth quarter U.S. Home Equity & Underwater Report said 14.5 million residential properties in the United States were considered equity-rich (the combined estimated amount of loans secured) was 50 percent or less of their estimated market value, representing 26.7 percent of the 54.5 million mortgaged homes in the U.S. That percentage was unchanged from the third quarter.
The report also said just 3.5 million, or one in 16, mortgaged homes in the fourth quarter were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. That figure represented 6.4 percent of all U.S. properties with a mortgage, down slightly from 6.5 percent in the prior quarter.
“Homeownership continued boosting household balance sheets across the United States in the fourth quarter of 2019, as people paying off mortgages were much more likely to be in equity-rich territory than seriously underwater,” said Todd Teta, chief product officer with ATTOM Data Solutions. “That marked yet another sign of how much the country has benefited from an eight-year housing-market boom.”
Teta noted some “big gaps” in equity levels persist between regions and market segments. “But as home values keep climbing, financial resources keep building for homeowners, which provides them with leverage to make home repairs, help their children through college or take on other major expenses,” he said.
Other report highlights:
–States with the highest share of equity-rich properties in the fourth quarter were all in the Northeast and West regions, led by California (42.8 percent), Vermont (39.2 percent), Hawaii (38.8 percent), Washington (35.4 percent) and New York (35.1 percent).
–States with the lowest percentage of equity-rich properties were Louisiana (13.6 percent), Oklahoma (14.9 percent), Illinois (15.3 percent), Arkansas (16.3 percent) and Alabama (16.5 percent).
–Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those with the highest shares of equity-rich properties were San Jose, Calif. (65.9 percent); San Francisco (57.5 percent); Los Angeles (47.8 percent); Santa Rosa, Calif. (45.9 percent) and Honolulu (39.3 percent). The leader in the Northeast region was Boston (35.6 percent) while Dallas led the South (36.5 percent) and Grand Rapids, Mich. led the Midwest (27.4 percent).
–Metro areas with the lowest percentage of equity-rich properties were Baton Rouge, La. (10.8 percent); Little Rock, Ark. (13.4 percent); Tulsa, Okla. (13.7 percent); Columbia, S.C. (13.9 percent) and Akron, Ohio (14.6 percent).
–Among the 1,467 counties with at least 2,500 properties with mortgages in the fourth quarter, 11 of the top 25 equity-rich locations were in California.
–Among 8,262 U.S. zip codes with at least 2,000 properties with mortgages in the fourth quarter of 2019, 451 zip codes reported at least half of all properties with a mortgage were equity rich.
–States with the highest shares of seriously underwater mortgages in the fourth quarter were all in the South and Midwest, led by Louisiana (16.8 percent), Mississippi (16.0 percent), West Virginia (13.9 percent), Iowa (13.5 percent) and Arkansas (12.9 percent).
–Metros with the highest share of seriously underwater mortgages included Youngstown, Ohio (16.2 percent); Baton Rouge, La. (15.9 percent); Scranton, Pa. (15 percent); Cleveland, Ohio (13.7 percent) and Akron, Ohio (13.4 percent).