ATTOM: Share of ‘Equity Rich’ Properties Hit a ‘Tipping Point’ in Q1

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Roughly 5.2 million U.S. residential properties were “seriously underwater” as of the end of the first quarter, a decrease of about 291,000 properties compared with the first quarter of 2017, according to the most recent Home Equity & Underwater Report from ATTOM Data Solutions.

That’s about 9.5% of all homes with a mortgage.

However, the number of “seriously underwater” homes increased slightly compared with the fourth quarter of 2017. As of the end of fourth quarter, about 9.3% of all homes with a mortgage were “seriously underwater,” according to the report.

The year-over-year decrease was the smallest one seen since ATTOM first began tracking  the number of “seriously underwater” properties in the first quarter of 2013 – indicating a slowdown in equity growth.

“We’ve reached a tipping point in this housing boom where enough homeowners have regained both sufficient equity and sufficient confidence to tap into their home equity – resulting in a noticeably slower decline in seriously underwater properties and slower growth in equity rich properties,” explains Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement.

“This tapping of equity could take the form of a cash-out refinance, home equity loan or simply a home sale,” Blomquist says. “We saw the biggest quarterly drop in average homeownership tenure for homeowners who sold in the first quarter since the fourth quarter of 2008, evidence that more homeowners are reaching that equity-tapping tipping point more quickly and deciding to sell.”

More than 19.5 million U.S. properties had between 20% and 50% equity (a loan-to-value ratio of between 80% and 50%) as of the end of the first quarter, down by 1.7 million compared with a year earlier, an 8% decrease.

Homes with 20% to 50% equity represented 36.1% of all properties with a mortgage as of the end of the first quarter, down from 36.3% in the fourth quarter and down from 37.6% in the first quarter of 2017.

More than 13.8 million properties with a mortgage were “equity rich,” up by more than 122,000 from a year earlier but still down from a peak of more than 14 million in the second quarter of 2017.

The 13.8 million equity rich properties represented 25.3% of all U.S. properties with a mortgage, down from 25.4% in the previous quarter but up from 24.3% a year earlier.

States with the highest share of equity rich homes were Hawaii (41.6%); California (41.5%); New York (34.8%); Washington (33.1%); and Oregon (31.8%).

Metropolitan areas with the highest share of equity-rich homes, as measured by the report, included San Jose, Calif. (66.1%); San Francisco, Calif. (56.0%); Los Angeles (45.4%); Honolulu (43.1%); and Seattle (39.1%).

States with the highest share of seriously underwater homes included Louisiana (20.1%); Mississippi (18.0%); Iowa (17.2%); West Virginia (15.9%); and Illinois (15.9%).

Metros with the highest share of seriously underwater homes included Scranton, Pa. (21.9%); Baton Rouge, La. (19.9%); Youngstown, Ohio (19.5%); New Orleans (18.5%); and Toledo, Ohio (18.0%).

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