Homeowner Equity Remains in Very Good Shape

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ATTOM Data Solutions’ fourth-quarter 2019 U.S. Home Equity & Underwater Report shows that 14.5 million residential properties in the U.S. were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value.

The report also shows that just 3.5 million, or one in 16, mortgaged homes in the fourth quarter of 2019 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value.

That figure represented 6.4% of all U.S. properties with a mortgage, down slightly from 6.5% in the prior quarter.

“Homeownership continued boosting household balance sheets across the United States in the fourth quarter of 2019, as people paying off mortgages were much more likely to be in equity-rich territory than seriously underwater,” explains Todd Teta, chief product officer with ATTOM Data Solutions.

“That marked yet another sign of how much the country has benefited from an eight-year housing-market boom. Some big gaps in equity levels persist between regions and market segments,” he says. “But as home values keep climbing, financial resources keep building for homeowners, which provides them with leverage to make home repairs, help their children through college or take on other major expenses.”

The count of equity-rich properties in the fourth quarter of 2019 represented 26.7%, or about one in four, of the 54.5 million mortgaged homes in the U.S.

That percentage was unchanged from the third quarter of 2019.

The top 10 states with the highest share of equity-rich properties in the fourth quarter of 2019 were all in the Northeast and West regions, led by California (42.8 percent equity-rich), Vermont (39.2 percent), Hawaii (38.8 percent), Washington (35.4 percent) and New York (35.1 percent).

States with the lowest percentage of equity-rich properties were Louisiana (13.6 percent equity-rich), Oklahoma (14.9 percent), Illinois (15.3 percent), Arkansas (16.3 percent) and Alabama (16.5 percent).

Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those with the highest shares of equity-rich properties were San Jose (65.9 percent equity-rich); San Francisco (57.5 percent); Los Angeles (47.8 percent); Santa Rosa, Calif. (45.9 percent) and Honolulu (39.3 percent).

The leader in the Northeast region was Boston (35.6 percent), while Dallas led the South (36.5 percent), and Grand Rapids, Mich., led in the Midwest (27.4 percent).

Metro areas with the lowest percentage of equity-rich properties were Baton Rouge, La. (10.8 percent equity-rich); Little Rock, Ark. (13.4 percent); Tulsa, Okla. (13.7 percent); Columbia, S.C. (13.9 percent) and Akron, Ohio (14.6 percent).

The top 10 states with the highest shares of mortgages that were seriously underwater in the fourth quarter of 2019 were all in the South and Midwest, led by Louisiana (16.8 percent seriously underwater), Mississippi (16.0 percent), West Virginia (13.9 percent), Iowa (13.5 percent) and Arkansas (12.9 percent).

Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those with the highest share of mortgages that were seriously underwater included Youngstown, Ohio (16.2 percent); Baton Rouge, La. (15.9 percent); Scranton, Pa. (15 percent); Cleveland (13.7 percent) and Akron, Ohio (13.4 percent).

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