HOMEOWNER EQUITY SHOOTS UP AGAIN ACROSS U.S. IN SECOND QUARTER AS HOME VALUES KEEP RISING

Half of U.S. Mortgaged Homes Now Considered Equity-Rich; Seriously Underwater Portion of Mortgages Dips Below 3 Percent; Sixteen Times as Many Mortgages are Equity Rich versus Seriously Underwater     

IRVINE, Calif., Aug. 4, 2022 /PRNewswire/ -- ATTOM, a leading curator of real estate data nationwide for land and property data, today released its second-quarter 2022 U.S. Home Equity & Underwater Report, which shows that 48.1 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.

The portion of mortgaged homes that were equity-rich in the second quarter of 2022 increased from 44.9 percent in the first quarter of 2022 and from 34.4 percent in the second quarter of 2021. The latest increase, to virtually half of all mortgage payers, marked the ninth straight quarterly rise in the portion of homes in equity-rich territory. The report found that at least half of all mortgage-payers in 18 states were equity-rich in the second quarter, compared to only three states a year earlier.

The report also shows that just 2.9 percent of mortgaged homes, or one in 34, were considered seriously underwater in the second quarter of 2022, 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 3.2 percent of all U.S. homes with a mortgage in the prior quarter and 4.1 percent, or one 24 properties, a year earlier.

"After 124 consecutive months of home price increases, it's no surprise that the percentage of equity rich homes is the highest we've ever seen, and that the percentage of seriously underwater loans is the lowest," said Rick Sharga, executive vice president of market intelligence at ATTOM. "While home price appreciation appears to be slowing down due to higher interest rates on mortgage loans, it seems likely that homeowners will continue to build on the record amount of equity they have for the rest of 2022."

Across the country, 49 states saw equity-rich levels increase from the first quarter of 2022 to the second quarter of 2022, while seriously underwater percentages dipped in 46 states. Year over year, equity-rich levels rose in all 50 states and seriously underwater portions dropped in 46 states.

The equity scenario continued improving in the second quarter for homeowners around the U.S., mainly because home values kept soaring. After a flat first quarter, the median single-family home price shot up another 9 percent quarterly and 15 percent annually during the Spring of this year to a new high of $346,000. For owners keeping up with mortgage payments – and even many that weren't - that meant a widening gap between what they owed and what their homes were worth, boosting more home values into equity-rich status.

In addition, down payments for recent buyers have grown from about 5 percent to 7 percent over the past couple of years, resulting in new owners starting off with more equity.

In the second quarter of 2022, equity continued on a relentless upward path despite significant economic uncertainties connected to home-mortgage rates doubling this year, inflation soaring at 40-year highs, rising fuel costs and other issues. While the chances of even more improvement remain uncertain, there is little immediate sign that equity gains will flatten out, especially as home buyers keep chasing a historically tight supply of properties for sale.

Equity-rich share of mortgages rises most in the South

Seven of the 10 states where the equity-rich share of mortgaged homes increased most from the first quarter of 2022 to the second quarter of 2022 were in the southern region of the U.S. The biggest increases were in Wyoming, where the portion of mortgaged homes considered equity-rich rose from 26.1 percent in the first quarter to 33.9 percent in the second quarter, Maine (up from 48.5 percent to 56.3 percent), Florida (up from 53.6 percent to 60.4 percent), Mississippi (up from 23.5 percent to 29.1 percent) and South Carolina (up from 41.2 percent to 46.5 percent).

States where the equity-rich share of mortgaged homes decreased, or went up the least, from the first quarter to the second quarter of this year were New Jersey (down from 38.6 percent to 37.9 percent), Utah (up from 63.6 percent to 64.3 percent), Idaho (up from 68.8 percent to 69.5 percent), North Dakota (up from 28.6 percent to 29.5 percent) and West Virginia (up from 26.9 percent to 28.4 percent).

Largest declines in seriously underwater properties spread across Northeast, South and Midwest

States with the biggest decreases in the percentage of mortgaged homes considered seriously underwater from the first quarter of 2022 to the second quarter of 2022 were spread across the Northeast, South and Midwest. They were led by Mississippi (share of mortgaged homes seriously underwater down from 17 percent to 8.1 percent), Wyoming (down from 10 percent to 7 percent), Missouri (down from 6.6 percent to 5.2 percent), Maine (down from 3.1 percent to 2.2 percent) and Connecticut (down from 4 percent to 3.3 percent).

The only states where the percentage of seriously underwater homes increased from the first quarter to the second quarter of this year were Montana (up from 3 percent to 3.9 percent), New Jersey (up from 2.9 percent to 3 percent) and New York (up from 2.7 percent to 2.8 percent).

West still with largest share of equity-rich homes; Midwest and South again have smallest

The highest levels of equity-rich properties around the U.S. remained in the West during the second quarter of 2022, with eight of the top 10 states located in that region. The top states were Vermont (71.4 percent of mortgaged homes were equity-rich), Idaho (69.5 percent), Arizona (64.8 percent), Utah (64.3 percent) and Washington (63.2 percent).

Twelve of the 15 states with the lowest percentages of equity-rich properties in the second quarter of 2022 were in the Midwest and South. The smallest portions were in Louisiana (23.4 percent of mortgaged homes), Illinois (25.4 percent), Alaska (26.7 percent), West Virginia (28.4 percent) and Mississippi (29.1 percent).

Among 107 metropolitan statistical areas around the nation with a population greater than 500,000, 39 of the top 40 with the highest shares of mortgaged properties that were equity-rich in the second quarter of 2022 were in the West and South. The top five were Austin, TX (76.5 percent equity-rich); San Jose, CA (75.1 percent); San Francisco, CA (70.5 percent); Sarasota-Bradenton, FL (70.4 percent) and Boise, ID (69.7 percent). While Austin again led the South and San Jose led the West, the leader in the Northeast region again was Portland, ME (62.6 percent) and the top metro in the Midwest continued to be Grand Rapids, MI (52 percent).

Seventeen of the 20 metro areas with the lowest percentages of equity-rich properties in the second quarter of 2022 were in the Midwest and South. The smallest levels were in Baton Rouge, LA (19.6 percent of mortgage homes were equity-rich); Wichita, KS (22.1 percent); Jackson, MS (24.8 percent); Little Rock, AR (25.7 percent) and Chicago, IL (26.5 percent).

The portion of mortgaged homes considered equity rich rose from the first quarter of 2022 to the second quarter of 2022 in 105 of the 107 metro areas with sufficient data (99 percent), while the level of mortgaged homes considered equity rich rose annually in 106 of the 107.

Top equity-rich counties located in Northeast, South and West

Among 1,624 counties that had at least 2,500 homes with mortgages in the second quarter of 2022, 49 of the top 50 equity-rich locations were in the Northeast, South and West.

Counties with the highest share of equity-rich properties were Dukes County (Martha's Vineyard), MA (83.2 percent equity-rich); Chittenden County (Burlington), VT (82.3 percent); Gillespie County, TX (west of Austin) (79.4 percent); Nantucket County, MA (78.6 percent) and Travis County (Austin), TX (78.6 percent).

Aside from Travis County, those with populations of at least 500,000 and the highest equity-rich rates were San Mateo County, CA (outside San Francisco) (78.2 percent); Santa Clara County (San Jose), CA (76 percent); Williamson County, TX (outside Austin) (75.6 percent) and Alameda County (Oakland), CA (73.2 percent).

Counties with the smallest share of equity-rich homes in the second quarter of 2022 were Geary County (Junction City), KS (7 percent equity rich); Vernon Parish, LA (northwest of Lafayette) (9.7 percent); Cumberland County (Fayetteville), NC (12 percent); Acadia Parish, LA (outside Lafayette) (13.2 percent) and Greenup County, KY (14 percent).

Counties with populations of at least 500,000 and the smallest equity-rich portions were Sedgwick County (Wichita), KS (22.8 percent equity-rich); Lake County, IL (outside Chicago) (24.2 percent); Cook County (Chicago), IL (26.3 percent); Baltimore County, MD (26.3 percent) and DuPage County, IL (outside Chicago (26.6 percent).

At least half of all properties considered equity-rich in almost 40 percent of zip codes

Among 8,708 U.S. zip codes that had at least 2,000 residential properties with mortgages in the second quarter of 2022, there were 3,889 (37 percent) where at least half the mortgaged properties were equity-rich.

Forty-eight of the top 50 were in California, Florida, Massachusetts and Texas, with five of the top 10 in Austin, TX. They were led by zip codes 78617 in Del Valle, TX (86.4 percent of mortgaged properties were equity-rich); 78739 in Austin, TX (85.7 percent); 34108 in Naples, FL (85.1 percent); 02539 in Edgartown, MA (85 percent) and 78733 in Austin, TX (84.8 percent).

South and Midwest still with largest shares of seriously underwater properties

Nine of the 10 states with the highest shares of mortgages that were seriously underwater in the second quarter of 2022 were in the South and Midwest. The top five were Louisiana (11 percent seriously underwater), Mississippi (8.1 percent), Wyoming (7 percent), Iowa (6.8 percent) and Illinois (6.5 percent).

The smallest shares were in Vermont (1 percent seriously underwater), California (1 percent), Washington (1 percent), Rhode Island (1.1 percent) and Florida (1.2 percent).

Among 107 metropolitan statistical areas with a population greater than 500,000, those with the largest shares of mortgages that were seriously underwater in the second quarter of 2022 were Baton Rouge, LA (10.8 percent); Wichita, KS (7.8 percent); New Orleans, LA (7.7 percent); Jackson, MS (6.7 percent) and Scranton, PA (6.5 percent).

The portion of mortgages that were seriously underwater nationwide during the second quarter of 2022 declined from the first quarter of 2022 in 101, or 95 percent, of the 107 metro areas with enough data to analyze. Seriously underwater rates decreased, year over year, in 102 of those 107 metros.

More than 25 percent of residential properties seriously underwater in just 33 zip codes

Among 8,708 U.S. zip codes that had at least 2,000 homes with mortgages in the second quarter of 2022, there were only 33 locations where more than 25 percent of mortgaged properties were seriously underwater. Of those, 14 were in Cleveland, OH; Detroit, MI and Philadelphia, PA.

The top five zip codes with the largest shares of seriously underwater properties in the second quarter of 2022 were 46408 in Gary, IN (47.7 percent of mortgaged homes were seriously underwater); 44108 in Cleveland, OH (46.6 percent); 66441 in Junction City, KS (44.9 percent); 10570 in Pleasantville, NY (44.8 percent) and 44112 in Cleveland, OH (42.9 percent).

More than 90 percent of homeowners facing foreclosure have at least some equity

Only about 214,800 homeowners were facing possible foreclosure in the second quarter of 2022, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 195,400, or 91 percent, had at least some equity built up in their homes.

"The fact that over 90% of homeowners in foreclosure have positive equity is good news for borrowers who find themselves in financial distress," Sharga noted. "These homeowners have the opportunity to leverage this equity to either secure short-term financing to resolve their delinquencies, or to sell their properties at a profit and avoid a foreclosure auction."

States with the highest percentages of homeowners who were facing foreclosure with equity in their properties in the second quarter of 2022 included New Hampshire (99 percent with equity), Oregon (99 percent), Utah (99 percent), Colorado (99 percent) and Nevada (99 percent). States with the lowest percentages included Louisiana (87 percent with equity), Mississippi (89 percent), Kansas (91 percent), Illinois (92 percent) and Maryland (92 percent).

Report methodology 

The ATTOM U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and amount of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data collected and licensed by ATTOM nationwide for more than 155 million U.S. properties. The ATTOM Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM found that markets where investors were more prominent, they would offset the loan to value ratio due to sales involving multiple properties with a single jumbo loan encompassing all of the properties. Therefore, going forward such activity is now excluded from the reports in order to provide traditional consumer home purchase and loan activity.

Definitions

Seriously underwater: Loan to value ratio of 125 percent or above, meaning the property owner owed at least 25 percent more than the estimated market value of the property.

Equity-rich: Loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity. 

About ATTOM

ATTOM provides premium property data to power products that improve transparency, innovation, efficiency and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 20TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property reports and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.

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