Homeowner Equity Dips in Q1, ATTOM Finds

(Image courtesy of Austin/pexels.com)

ATTOM, Irvine, Calif., released its first-quarter 2024 U.S. Home Equity and Underwater report, revealing 45.8% of mortgaged residential properties in the U.S. are equity-rich.

ATTOM defines equity-rich as when the combined estimated amount of loan balances secured by those properties is no more than half of their estimated market values.

However, that’s a slight drop from 46.1% in the fourth quarter of 2023, the third straight quarterly decline. And down more significantly from 47.2% in Q1 2023.

It’s also the lowest point for equity-rich homes in two years.

The portion of homes with mortgages that were seriously underwater rose in the first quarter from 2.6% to 2.7% of all residential mortgages.

ATTOM defines seriously underwater mortgages as those with combined estimated balances of loans secured by properties that are at least 25% more than those properties’ estimated market values.

“Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to help finance all kinds of things, from home renovations to business startups. Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated,” said Rob Barber, CEO for ATTOM. “It’s too early to make any broad statements about the market direction, especially coming off the typically slower fall and winter months. But amid the recent trends, this year’s spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing.”

The largest decline in equity-rich mortgages by state were in the south, led by Kentucky (the portion of equity-rich homes fell from 35.4% in Q4 2023 to 28.7% in Q1 2024), South Carolina (42.4% to 40%), Georgia (46% to 43.7%), Delaware (39.4% to 37.2%) and Indiana (43% to 40.9%).

Some states did see increases in the share of equity-rich homes. Those were led by South Dakota (up from 49.8% in Q4 2023 to 51.5% in Q1 2024), Hawaii (up from 55% to 56.5%), Montana (up from 57.3% to 58.7%), North Dakota (up from 30.4% to 31.5%) and Mississippi (up from 37.3% to 38.3%).

The states that saw the largest increase in seriously underwater mortgages were Kentucky (up from 6.3% in Q4 2023 to 8.3% in Q1 2024), West Virginia (up from 4.4% to 5.4%), Oklahoma (up from 5.5% to 6.1%), Arkansas (up from 5.2% to 5.7%) and Delaware (up from 2.3% to 2.7%).

The states that saw the largest drops in the share of seriously underwater mortgages were Missouri (down from 5.6% in Q4 2023 to 4.5% in Q1 2024), Mississippi (down from 8% to 7.1%), Arizona (down from 1.9% to 1.6%), Hawaii (down from 1.7% to 1.6%) and Tennessee (down from 2.9% to 2.8%).