3Q Equity-Rich Properties Soar to New Highs

ATTOM, Irvine, Calif., said a record 39.5 percent of mortgaged residential properties in the United States were considered equity-rich in the third quarter.

The company’s quarterly U.S. Home Equity & Underwater Report said that was up from 34.4 percent in the second quarter and from 28.3 percent a year ago.

The report also said just 3.4 percent of mortgaged homes, or one in 29, were considered seriously underwater in the third quarter, with a combined estimated balance of loans secured by the property of at least 25 percent more than the property’s estimated market value. That was down from 4.1 percent of all U.S. homes with a mortgage in the prior quarter and 6 percent, or one 17 properties, a year ago.

Across the country, 46 states including the District of Columbia saw equity-rich levels increase from the second quarter to the third quarter 1, while seriously underwater percentages decreased in 39 states. Year over year, equity-rich levels rose in 49 states including the District of Columbia, and seriously underwater portions dropped in 47 states including the District of Columbia.

Todd Teta, Chief Product Officer with ATTOM, said the improvements at both ends of the equity scale represented some of the largest quarterly gains in two years and provided yet another sign of how strong the U.S. housing market remained in the third quarter, even as the broader economy only gradually recovered from damage resulting from the coronavirus pandemic that hit early last year.

“Homeowners across most of the United States could sit back with a smile yet again in the third quarter and watch their balance sheets grow as soaring home prices pushed their equity levels ever higher. Amid the best gains in two years, nearly four of every 10 owners found themselves in equity-rich territory,” Teta said. “For sure, some uncertainty lies ahead as other key market barometers have been a bit shaky as of late. And the coronavirus pandemic remains a threat. But there is [no] doubt that homeowners continue benefiting big-time from the relentless home price increases we are seeing around the country.”

The report noted equity increases between July and September came as the median home price nationwide rose 4 percent quarterly and 16 percent year over year, to a record of $310,500. Median vales rose up at least 10 percent annually in two-thirds of metro-areas around the country. Those ongoing price runups continued boosting equity because they widened gaps between what homeowners owed on their mortgages and the value of their properties.

Eight of the top 10 states where the equity-rich share of mortgaged homes rose most from the second quarter to the third quarter were in the West and South. States with the biggest increases were Utah, where the portion of mortgaged homes considered equity-rich rose from 45.5 percent to 60.9 percent; Arizona (up from 39.7 percent to 53.2 percent), Idaho (up from 54.2 percent to 65.1 percent), North Carolina (up from 28.4 percent to 38.6 percent) and Nevada (up from 34.9 percent to 44.9 percent).

States where the equity-rich share of mortgaged homes decreased most from the second to the third quarter were Kansas (down from 31.4 percent to 27.1 percent), Wyoming (down from 29.5 percent to 25.8 percent), Mississippi (down from 26.6 percent to 23 percent), Montana (down from 40.8 percent to 38.5 percent) and California (down from 53.8 percent to 52.1 percent).

States with the biggest declines from the second quarter to the third quarter in the percentage of mortgaged homes considered seriously underwater were in the South and Midwest. They were led by West Virginia (from 11.7 percent to 7.1 percent), Ohio (down from 7.8 percent to 5.4 percent), Arkansas (down from 8.8 percent to 7 percent), Michigan (down from 5.4 percent to 3.7 percent) and Kentucky (down from 7.7 percent to 6.2 percent).

States where the percentage of seriously underwater homes rose most from the second to the third quarter of 2021 were Mississippi (up from 7.6 percent to 17.7 percent), Wyoming (up from 3.6 percent to 11.5 percent), Maine (up from 3.4 percent to 5.8 percent), Kansas (up from 4.6 percent to 6.7 percent) and Montana (up from 3 percent to 3.6 percent).