Industry News

U.S. homes have near-record levels of equity

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Homes around the country have near-record levels of equity, with the Seattle-Tacoma-Bellevue area ranking 21st among markets with the highest percentage of equity-rich households. ATTOM Data Solutions LLC reported 48.5% of mortgaged residential properties nationally were considered equity-rich in the third quarter.

A property is defined as equity-rich when the amount of loan balances secured by it is not more than 50% of its estimated market value.

Q3 2022 marked the 10th consecutive quarterly increase according to the company’s Q3 2022 U.S. Home Equity & Underwater Report. In Q2 it was 48.1% and in Q3 2021 it was 39.5%.

ATTOM’s analysts said the latest increase was smaller than other gains in recent years. The report also noted that only 2.9% of mortgaged homes (about one in 35) were considered seriously underwater in the third quarter.  That matched the second quarter and was down from the year ago (Q3 2021) figure of 3.4%.

A property is considered seriously underwater if it has a loan to value ratio of 125% or higher, meaning the property owner owed at least 25% more than the property’s estimated market value.

At least half of all mortgage-payers in 20 states were equity-rich in the third quarter, up from only seven states a year earlier.  The highest concentration of equity-rich properties is in the West, including six of the top 10 states, while nine of the 10 states with the lowest percentages of equity-rich properties in the latest report were in the Midwest and South.

According to the National Association of REALTORS®, about half its members (49%) in 2008 were working with a client on a distressed sale. That number dropped to 1% for September 2022.

ATTOM analyzed 107 metropolitical statistical areas nationwide with populations of 500,000-plus. All but one of the top 25 equity-rich areas are in the West and South, with Austin, Texas topping the list at 71.6%. Spokane-Spokane Valley was ninth. The Seattle-Tacoma-Bellevue area ranked 21st with 61.7% of equity-rich mortgage homes, up from the year ago number of 56.6%. Only 1% of the region’s mortgaged homes are seriously underwater.

Year over year, equity-rich levels rose in all 50 states, according to ATTOM. Seriously underwater percentages declined in 43 states.

“Even though home price appreciation has slowed down dramatically in recent months, homeowners have continued to build equity,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “And it appears that many of those homeowners have decided to stay where they are rather than purchase a new home, and are beginning to tap into that equity, as the number of home equity lines of credit (HELOCs) issued in the second quarter of 2022 rose by 43 percent from the prior year.”

ATTOM uses multiple sources of data for its reports, including property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million residential and commercial properties encompassing 99% of the U.S. population. In addition to state and metro reports, its analysis includes county and zip code comparisons.

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