Home Equity Gains Level Off, Remain Strong

IRVINE, Calif. – The property analytics firm ATTOM’s third quarter 2024 U.S. Home Equity & Underwater Report shows that 48.3% of mortgaged residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.

That level was down from a recent peak of 49.2% hit in the second quarter of 2024. However, it was still up from 47.4% a year earlier and remained historically high, reflecting one of the enduring effects of a housing market boom around the nation that has lasted more than a decade.

Much the same pattern emerged during the third quarter for the portion of home mortgages that were seriously underwater. Just 2.5% of mortgaged homes fell into that category, with combined estimated balances of loans secured by properties that are at least 25% more than those properties’ estimated market values. That was slightly worse than the 2.4% recorded in the prior quarter and the same is in the third quarter of 2023.

“Homeowner equity typically mirrors home-price trends, and the third quarter of this year followed that pattern. Equity remained elevated as the value of residential properties has surged consistently over the years. However, it held steady this quarter, reflecting the cooling of earlier sharp price increases,” said Rob Barber, CEO for ATTOM. “Despite the flat pattern, home equity keeps providing a significant boost to the economy in the form of financial leverage that tens of millions of households can use to finance major purchases or investments.”

He added that “we can expect to see small movements up or down over the coming months as the housing market moves into its annual slow season.”

The latest equity pattern comes as the market remains strong throughout most of the nation but also faces a mix of forces that could either keep it going upward or flatten it out.

Equity-rich shares of mortgages dip quarterly but remain up annually in majority of states

The portion of mortgaged homes that were equity-rich during the third quarter of 2024, 48.3%, remained far above the 26.5% level recorded in early 2020. Although it decreased in 28 of the 50 U.S. states from the second quarter to the third quarter of 2024, typically by less than two percentage points, it continued to be up annually in 37 states.

Annual increases generally tilted more toward low- and mid-priced markets around the country, concentrated in the Midwest and Northeast regions. The increases were led by Vermont (portion of mortgaged homes considered equity-rich increased from 79.8% in the third quarter of 2023 to 86.4% in the third quarter of 2024), West Virginia (up from 30.5% to 37%), Connecticut (up from 41.5% to 47.7%), New Jersey (up from 45.9% to 52% ) and Rhode Island (up from 54.7% to 60.6%).

At the other end of the scale, equity-rich levels declined more often in western states, led by Utah (down, year over year, from 56.8% to 52.4%), Arizona (down from 54.3% to 50%), Colorado (down from 51.1% to 48%), Washington (down from 56.7% to 54.6%) and Oregon (down from 52.7% to 50.8%).

Seriously underwater mortgage levels change by small amounts in most states

The portion of mortgaged homes considered seriously underwater across the U.S. barely changed during the third quarter. It stood at one in 40, which was up slightly from one in 42 during the second quarter but the same as a year earlier – and well below the ratio of one in 15 recorded in 2020.

The rate worsened quarterly in 30 states, though it was still better annually in 24.

The biggest annual improvements in seriously underwater mortgages came in Wyoming (share of mortgaged homes that were seriously underwater down from 5.9% in the third quarter of 2023 to 2.4% in the third quarter of 2024), West Virginia (down from 4.6% to 3.8%), Louisiana (down from 10.8% to 10.1%), Illinois (down from 4.4% to 4.1%) and New Jersey (down from 1.9% to 1.6%).

On the flip side, the largest year-over-year increases in the percentage of seriously underwater homes during the third quarter of 2024 were in Kansas (up from 2.6% to 4.4%), Utah (up from 1.8% to 2.4%), South Dakota (up from 2.6% to 3.1%), Missouri (up from 3.9% to 4.3%) and Colorado (up from 1.7% to 2%).

High-end markets clustered in Northeast and West continue to benefit from best equity-rich rates

The 10 states with the highest levels of equity-rich mortgaged properties around the U.S. during the third quarter of 2024 again were in the Northeast or West regions. Those with the largest portions were Vermont (86.4% of mortgaged homes were equity-rich), Maine (62.2%), New Hampshire (61.1%), Rhode Island (60.6%) and Montana (60.5%).

Nine of the 10 states with the lowest percentages of equity-rich properties during the third quarter of 2024 were in the Midwest or South. The smallest portions were in Louisiana (21.1% of mortgaged homes were equity-rich), Alaska (31.9%), North Dakota (33.2%), Maryland (33.2%) and Illinois (34%).

Among 107 metropolitan statistical areas around the nation with a population of at least 500,000, upscale markets where median home values surpassed $450,000 topped the list of places with the highest portion of mortgaged properties that were equity-rich during the third quarter. 

They were led by San Jose, CA (68.7% equity-rich, with a third-quarter median home price of $1.5 million); Portland, ME (64.6%, with a median price of $520,000); San Diego, CA (64.1%, with a median price of $885,000); Los Angeles, CA (63.9%, with a median price of $949,375) and Buffalo, NY (63.7%, with a median price of $268,000).

The leader in the South was Knoxville, TN (60.7%, with a median price of $345,949) while the Midwest was led again by Grand Rapids, MI (55%, with a median price of $327,520).

Metro areas with the lowest percentages of equity-rich properties in the third quarter of 2024 remained mostly in lower-priced markets of the South and Midwest. The smallest levels were in Baton Rouge, LA (15.8% of mortgaged homes were equity-rich, with a third-quarter median home price of $223,564); New Orleans, LA (26.9%, with a median price of $242,900); Little Rock, AR (30.1%, with a median price of $215,844); Virginia Beach, VA (30.2%, with a median price of $330,000) and Jackson, MS (30.2%, with a median price of $285,407).

The portion of mortgaged homes considered equity rich decreased from the second to the third quarter of 2024 in 80 of the 107 metro areas with sufficient data (75%) but was still up from the third quarter of 2023 to the same period of 2024 in 70 of those markets (66%). 

Midwest and South still have highest seriously underwater mortgage rates

The Midwest and South regions had 19 of the 20 states with the highest shares of mortgages that were seriously underwater in the third quarter of this year. The top five were Louisiana (10.1% seriously underwater), Mississippi (7.2%), Kentucky (5.5%), Arkansas (5.4%) and Iowa (5.2%).

The smallest shares were in Vermont (0.7%  seriously underwater), Rhode Island (0.9%), New Hampshire (1%), Massachusetts (1.1%) and California (1.4%).

Among different regions, one of every 29 mortgaged homes was seriously underwater in the Midwest, one of every 37 in the South, one of every 50 in the Northeast and one of every 61 in the West.

Among 107 metropolitan statistical areas with a population greater than 500,000, those with the largest shares of mortgages that were seriously underwater in the third quarter of 2024 were Baton Rouge, LA (11.1%); New Orleans, LA (7.4%); Jackson, MS (6.6%); Kansas City, MO (5.5%) and Little Rock, AR (5.2%).

The portion of mortgages that were seriously underwater increased quarterly in 80, or 75%, of the metro areas in the U.S. with enough data to analyze. They were up, year over year, in 61%  of the metro areas analyzed.

Report methodology

The ATTOM 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 nationwide for more than 155 million U.S. properties. The ATTOM Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM 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.

Source: ATTOM

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