Equity-Rich Properties Outnumber Seriously Underwater Homes by Seven-to-One Ratio; Portion of U.S. Homes Considered Equity-Rich Up To 32 Percent; Seriously Underwater Properties Below 5 Percent
IRVINE, Calif., May 13, 2021 /PRNewswire/ -- ATTOM Data Solutions, curator of the nation's premier property database, today released its first-quarter 2021 U.S. Home Equity & Underwater Report, which shows that 17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.
The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States. That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020 – one of many measures showing how the U.S. housing market continues fending off economic damage caused by the worldwide Coronavirus pandemic.
The report also shows that just 2.6 million, or one in 21, mortgaged homes in the first quarter of 2021 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 4.7 percent of all U.S. properties with a mortgage, down from 5.4 percent in the prior quarter, 6 percent in the third quarter of 2020 and 6.6 percent a year ago.
Among the 50 states, 41 showed an increase from the fourth quarter of 2020 to the first quarter of 2021 in the percentage of homes considered equity-rich, while 49 saw a decrease in the percentage that were seriously underwater.
The improvement at both ends of the equity scale continued across the nation despite the fallout from the pandemic. Gains came as median home prices nationwide rose 16 percent, year over year, in the first quarter of 2021 and were up at least 10 percent in most of the country.
As the nine-year U.S. housing-market boom has surged ahead, equity has continued to improve because price increases have widened the gap between what homeowners owe on mortgages and the value of their properties. Prices have kept rising over the past year as rock-bottom interest rates and a desire to escape virus-prone areas have led to a bubble of home buyers largely untainted by the pandemic's financial damage. Those buyers have been chasing a declining supply of properties for sale, resulting in soaring values.
"It continues to be a great time to be a homeowner most everywhere in the country. The ongoing price spikes we're seeing help to cut down the number of seriously underwater properties and boost the level of equity-rich properties," said Todd Teta, chief product officer with ATTOM Data Solutions. "However, that may shift once the foreclosure moratorium is lifted and that's something we're watching, partly because it could limit equity gains and draw people underwater. For now, though, the equity picture remains one of many signs that the long U.S. housing market boom keeps charging ahead."
Western and northeastern states show biggest improvement in equity-rich share of homes
Nine of the 10 states with the biggest gains in the share of equity-rich homes from the fourth quarter of 2020 to the first quarter of 2021 were in the West or Northeast. States where the portion of mortgaged homes considered equity-rich rose most were Idaho (up from 42.7 percent in the fourth quarter of 2020 to 50.6 percent in the first quarter of 2021), Utah (up from 37.9 percent to 42.5 percent), Colorado (up from 36.5 percent to 40.6 percent), Vermont (up from 47.8 percent to 51.5 percent) and Washington (up from 41 percent to 44.5 percent).
States where the share of equity-rich homes decreased the most from the fourth quarter of 2020 to the first quarter of 2021 were West Virginia (down from 21.6 percent of mortgaged properties to 19.5 percent), Louisiana (down from 17.1 percent to 15.7 percent), Pennsylvania (down from 26.1 percent to 24.9 percent), Iowa (down from 22.1 percent to 20.9 percent) and Mississippi (down from 25.6 percent to 25.2 percent).
Largest declines in underwater properties across Midwest and South
Nine of the 10 states with the biggest declines in the percentage of mortgaged homes considered seriously underwater from the fourth quarter of 2020 to the first quarter of 2021 were in the South and Midwest. They were led by Iowa (share of homes seriously underwater down from 11.3 percent to 8.7 percent), Mississippi (down from 11.4 percent to 9.1 percent), Louisiana (down from 14.9 percent to 13 percent), South Dakota (down from 8.2 percent to 6.3 percent) and Nebraska (down from 7.3 percent to 5.5 percent).
States where the percentage of seriously underwater homes rose, or dropped by the smallest amounts, from the fourth quarter to the first quarter were Pennsylvania (up from 7.1 percent to 7.3 percent), Oklahoma (down from 8.3 percent to 8.2 percent), Washington (down from 2.2 percent to 2.1 percent), Illinois (down from 10.6 percent to 10.4 percent) and Minnesota (down from 4.2 percent to 3.9 percent).
Northeast and West continue to have largest shares of equity-rich homes
The Northeast and West again had far higher levels of equity-rich properties than other regions. The top 11 states with the highest levels in the first quarter of 2021 were led by Vermont, (51.5 percent of mortgage properties were equity-rich), Idaho (50.6 percent), California (49 percent), Washington (44.5 percent) and Utah (42.5 percent).
The 10 states with the lowest percentage of equity-rich properties in the first quarter of 2021 were in the Midwest and South, led by Louisiana (15.7 percent), Illinois (16.8 percent), Oklahoma (18 percent), West Virginia (19.5 percent) and Alabama (20.3 percent).
Among 106 metropolitan statistical areas with a population greater than 500,000, the 10 with the highest shares of equity-rich properties again were in the West during the first quarter of 2021. They were led by San Jose, CA (67.4 percent of mortgaged properties were equity-rich); San Francisco, CA (60.8 percent); Boise, ID (53.8 percent); Los Angeles, CA (53.6 percent) and San Diego, CA (49.3 percent). The leader in the Northeast region again was Boston, MA (41 percent), while Grand Rapids, MI, continued to top the Midwest (33.1 percent) and Dallas, TX, led the South (43.4 percent).
Metro areas with the lowest percentage of equity-rich properties in the first quarter of 2021 continued to be Baton Rouge, LA (12.7 percent equity-rich); Columbia, SC (14.2 percent); Akron, OH (16.3 percent); Tulsa, OK (16.6 percent) and Little Rock, AR (16.8 percent).
Among the 106 metro areas analyzed, 86 (81 percent) showed an increase in levels of equity-rich properties from the fourth quarter of 2020 to the first quarter of 2021; while 20 (19 percent) showed a decrease.
San Francisco area dominates list of top equity-rich counties
Among 1,493 counties that had at least 2,500 properties with mortgages in the first quarter of 2021, 15 of the top 20 equity-rich locations were in the West. The highest concentration again was in the San Francisco Bay area of California.
Counties among those with the highest share of equity-rich properties included San Mateo County, CA (outside San Francisco) (70.9 percent or mortgage homes were equity-rich); Washington County, WI (outside Milwaukee) (70.3 percent); Santa Clara County (San Jose), CA (68.3 percent); Monterey County, CA (outside San Francisco) (64.5 percent) and San Francisco County, CA (64 percent)
Counties among those with the smallest share included Cumberland County (Fayetteville), NC (7.6 percent); Brown County, OH (outside Cincinnati) (7.7 percent); Hoke County, NC (outside Fayetteville) (8.6 percent); Vernon Parish, LA (west of Alexandria) (8.6 percent) and Iberville Parish, LA (outside Baton Rouge) (9.7 percent).
At least half of mortgaged properties were equity-rich in 653 zip codes
Among 8,267 U.S. zip codes that had at least 2,000 properties with mortgages in the first quarter of 2021, there were 883 where at least half of all properties with a mortgage were equity-rich.
Forty-four of the top 50 were in California, mostly in the San Francisco Bay area. They were led by zip codes 94024 in Los Altos, CA (81.8 percent equity-rich); 94301 in Palo Alto, CA (80.2 percent); 94306 in Palo Alto, CA (80.1 percent); 94707 in Berkeley, CA (78.9 percent) and 94022 in Los Altos, CA (78.7 percent).
South and Midwest continue to have highest seriously underwater shares
The top 10 states with the highest shares of mortgages that were seriously underwater in the first quarter of 2021 were all in the South and Midwest, led by Louisiana (13 percent seriously underwater), West Virginia (10.5 percent), Illinois (10.4 percent), Arkansas (9.2 percent) and Mississippi (9.1 percent). The smallest percentages again were in Oregon (1.8 percent), California (1.9 percent), Arizona (2 percent), Washington (2.1 percent) and Utah (2.1 percent).
Among 106 metropolitan statistical areas with a population greater than 500,000, those with the highest share of mortgages that were seriously underwater in the first quarter of 2021 were Baton Rouge, LA (13.2 percent); Toledo, OH (10.8 percent); Akron, OH (10.5 percent); New Orleans, LA (10.2 percent) and Youngstown, OH (10 percent).
Among the 106 metro areas, just 6 (6 percent) showed an increase in levels of seriously underwater properties from the fourth quarter of 2020 to the first quarter of 2021; while 100 (94 percent) showed a decrease.
At least 25 percent of mortgaged properties were seriously underwater in 41 zip codes
Among 5,438 U.S. zip codes that had at least 2,000 properties with mortgages in the first quarter of 2021, there were 39 zip codes where at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in Cleveland, OH; Akron, OH, and St. Louis, MO.
The top five zip codes with the highest shares of seriously underwater properties were 95969 in Paradise, CA (80.2 percent or mortgaged homes were seriously underwater); 44105 in Cleveland, OH (52.4 percent); 44110 in Cleveland, OH (51.9 percent); 44112 in Cleveland, OH (47.7 percent) and 63137 in St. Louis, MO (45.5 percent).
The ATTOM Data Solutions 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 Data Solutions nationwide for more than 155 million U.S. properties. The ATTOM Data Solutions Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM Data Solutions 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.
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 Data Solutions
ATTOM Data Solutions 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 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, marketing lists, match & append and introducing the first property data delivery solution, a cloud-based data platform that streamlines data management – Data-as-a-Service (DaaS).
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