Home Equity Continued to Rise in 2018 as Homeowners Stayed Put

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Due to rising home prices, the number of mortgaged U.S. residential properties considered “equity rich” increased by about 834,000 in 2018, bringing the total number of equity rich properties to about 14.5 million, according to ATTOM Data solutions.

ATTOM defines “equity rich” as when the combined estimated amount of loans secured by the property is 50% or less of the property’s estimated market value.

The 14.5 million equity rich properties as of the end of the fourth quarter represented 25.6% of all properties with a mortgage, down slightly from 25.7% in the third quarter but up from 25.4% in the fourth quarter 2017, according to the firm’s Home Equity & Underwater Report.

However, despite these equity gains, more than 5 million U.S. properties remained seriously underwater – where the combined estimated balance of loans secured by the property was at least 25% higher than the property’s estimated market value.

As of the end of the fourth quarter, about 8.8% of all U.S. properties with a mortgage were seriously underwater – unchanged compared with the previous quarter and down from 9.3% compared with the fourth quarter of 2017.

“With homeowners staying put longer, homeownership equity will most likely continue to strengthen,” says Todd Teta, chief product officer with ATTOM Data Solutions, in a statement. “Those that are seriously underwater may find themselves coming up for air as they continue to pay off excessive legacy mortgages or sell.”

States with the highest share of equity rich properties, as of the fourth quarter, include California (43.6%); Hawaii (39.3%); New York (34.2%); Washington (34.2%); and Oregon (32.9%).

States with the highest share of underwater properties include Louisiana (20.8%); Mississippi (16.9%); Arkansas (15.9%); Illinois (15.6%); and Iowa (15.2%).

As Teta points out, the West coast markets continue to have the highest share of equity rich properties, versus the South and Midwest markets, which “continue to have stubbornly high rates of seriously underwater homeowners.”

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