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Half of U.S. mortgaged homes now considered equity-rich

Christian Fernsby |
ATTOM released its second quarter 2022 U.S. Home Equity & Underwater Report, which shows that 48.1 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter.

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That is meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.

The portion of mortgaged homes that were equity-rich in the second quarter of 2022 increased from 44.9 percent in the first quarter of 2022 and from 34.4 percent in the second quarter of 2021.

The latest increase, to virtually half of all mortgage payers, marked the ninth straight quarterly rise in the portion of homes in equity-rich territory.

The report found that at least half of all mortgage-payers in 18 states were equity-rich in the second quarter, compared to only three states a year earlier.

The report also shows that just 2.9 percent of mortgaged homes, or one in 34, were considered seriously underwater in the second quarter of 2022, with a combined estimated balance of loans secured by the property of at least 25 percent more than the property's estimated market value.

That was down from 3.2 percent of all U.S. homes with a mortgage in the prior quarter and 4.1 percent, or one 24 properties, a year earlier.

Across the country, 49 states saw equity-rich levels increase from the first quarter of 2022 to the second quarter of 2022, while seriously underwater percentages dipped in 46 states. Year over year, equity-rich levels rose in all 50 states and seriously underwater portions dropped in 46 states.

The equity scenario continued improving in the second quarter for homeowners around the U.S., mainly because home values kept soaring. After a flat first quarter, the median single-family home price shot up another 9 percent quarterly and 15 percent annually during the Spring of this year to a new high of $346,000. For owners keeping up with mortgage payments – and even many that weren't - that meant a widening gap between what they owed and what their homes were worth, boosting more home values into equity-rich status.

In addition, down payments for recent buyers have grown from about 5 percent to 7 percent over the past couple of years, resulting in new owners starting off with more equity.

In the second quarter of 2022, equity continued on a relentless upward path despite significant economic uncertainties connected to home-mortgage rates doubling this year, inflation soaring at 40-year highs, rising fuel costs and other issues. While the chances of even more improvement remain uncertain, there is little immediate sign that equity gains will flatten out, especially as home buyers keep chasing a historically tight supply of properties for sale.

Seven of the 10 states where the equity-rich share of mortgaged homes increased most from the first quarter of 2022 to the second quarter of 2022 were in the southern region of the U.S. The biggest increases were in Wyoming, where the portion of mortgaged homes considered equity-rich rose from 26.1 percent in the first quarter to 33.9 percent in the second quarter, Maine (up from 48.5 percent to 56.3 percent), Florida (up from 53.6 percent to 60.4 percent), Mississippi (up from 23.5 percent to 29.1 percent) and South Carolina (up from 41.2 percent to 46.5 percent).

States where the equity-rich share of mortgaged homes decreased, or went up the least, from the first quarter to the second quarter of this year were New Jersey (down from 38.6 percent to 37.9 percent), Utah (up from 63.6 percent to 64.3 percent), Idaho (up from 68.8 percent to 69.5 percent), North Dakota (up from 28.6 percent to 29.5 percent) and West Virginia (up from 26.9 percent to 28.4 percent).

States with the biggest decreases in the percentage of mortgaged homes considered seriously underwater from the first quarter of 2022 to the second quarter of 2022 were spread across the Northeast, South and Midwest. They were led by Mississippi (share of mortgaged homes seriously underwater down from 17 percent to 8.1 percent), Wyoming (down from 10 percent to 7 percent), Missouri (down from 6.6 percent to 5.2 percent), Maine (down from 3.1 percent to 2.2 percent) and Connecticut (down from 4 percent to 3.3 percent).

The only states where the percentage of seriously underwater homes increased from the first quarter to the second quarter of this year were Montana (up from 3 percent to 3.9 percent), New Jersey (up from 2.9 percent to 3 percent) and New York (up from 2.7 percent to 2.8 percent).

The highest levels of equity-rich properties around the U.S. remained in the West during the second quarter of 2022, with eight of the top 10 states located in that region. The top states were Vermont (71.4 percent of mortgaged homes were equity-rich), Idaho (69.5 percent), Arizona (64.8 percent), Utah (64.3 percent) and Washington (63.2 percent).

Twelve of the 15 states with the lowest percentages of equity-rich properties in the second quarter of 2022 were in the Midwest and South. The smallest portions were in Louisiana (23.4 percent of mortgaged homes), Illinois (25.4 percent), Alaska (26.7 percent), West Virginia (28.4 percent) and Mississippi (29.1 percent).

Among 107 metropolitan statistical areas around the nation with a population greater than 500,000, 39 of the top 40 with the highest shares of mortgaged properties that were equity-rich in the second quarter of 2022 were in the West and South. The top five were Austin, TX (76.5 percent equity-rich); San Jose, CA (75.1 percent); San Francisco, CA (70.5 percent); Sarasota-Bradenton, FL (70.4 percent) and Boise, ID (69.7 percent). While Austin again led the South and San Jose led the West, the leader in the Northeast region again was Portland, ME (62.6 percent) and the top metro in the Midwest continued to be Grand Rapids, MI (52 percent).

Seventeen of the 20 metro areas with the lowest percentages of equity-rich properties in the second quarter of 2022 were in the Midwest and South. The smallest levels were in Baton Rouge, LA (19.6 percent of mortgage homes were equity-rich); Wichita, KS (22.1 percent); Jackson, MS (24.8 percent); Little Rock, AR (25.7 percent) and Chicago, IL (26.5 percent).

The portion of mortgaged homes considered equity rich rose from the first quarter of 2022 to the second quarter of 2022 in 105 of the 107 metro areas with sufficient data (99 percent), while the level of mortgaged homes considered equity rich rose annually in 106 of the 107.

Among 1,624 counties that had at least 2,500 homes with mortgages in the second quarter of 2022, 49 of the top 50 equity-rich locations were in the Northeast, South and West.

Counties with the highest share of equity-rich properties were Dukes County (Martha's Vineyard), MA (83.2 percent equity-rich); Chittenden County (Burlington), VT (82.3 percent); Gillespie County, TX (west of Austin) (79.4 percent); Nantucket County, MA (78.6 percent) and Travis County (Austin), TX (78.6 percent).

Aside from Travis County, those with populations of at least 500,000 and the highest equity-rich rates were San Mateo County, CA (outside San Francisco) (78.2 percent); Santa Clara County (San Jose), CA (76 percent); Williamson County, TX (outside Austin) (75.6 percent) and Alameda County (Oakland), CA (73.2 percent).

Counties with the smallest share of equity-rich homes in the second quarter of 2022 were Geary County (Junction City), KS (7 percent equity rich); Vernon Parish, LA (northwest of Lafayette) (9.7 percent); Cumberland County (Fayetteville), NC (12 percent); Acadia Parish, LA (outside Lafayette) (13.2 percent) and Greenup County, KY (14 percent).

Counties with populations of at least 500,000 and the smallest equity-rich portions were Sedgwick County (Wichita), KS (22.8 percent equity-rich); Lake County, IL (outside Chicago) (24.2 percent); Cook County (Chicago), IL (26.3 percent); Baltimore County, MD (26.3 percent) and DuPage County, IL (outside Chicago (26.6 percent).

Among 8,708 U.S. zip codes that had at least 2,000 residential properties with mortgages in the second quarter of 2022, there were 3,889 (37 percent) where at least half the mortgaged properties were equity-rich.

Forty-eight of the top 50 were in California, Florida, Massachusetts and Texas, with five of the top 10 in Austin, TX. They were led by zip codes 78617 in Del Valle, TX (86.4 percent of mortgaged properties were equity-rich); 78739 in Austin, TX (85.7 percent); 34108 in Naples, FL (85.1 percent); 02539 in Edgartown, MA (85 percent) and 78733 in Austin, TX (84.8 percent).

Nine of the 10 states with the highest shares of mortgages that were seriously underwater in the second quarter of 2022 were in the South and Midwest. The top five were Louisiana (11 percent seriously underwater), Mississippi (8.1 percent), Wyoming (7 percent), Iowa (6.8 percent) and Illinois (6.5 percent).

The smallest shares were in Vermont (1 percent seriously underwater), California (1 percent), Washington (1 percent), Rhode Island (1.1 percent) and Florida (1.2 percent).

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 second quarter of 2022 were Baton Rouge, LA (10.8 percent); Wichita, KS (7.8 percent); New Orleans, LA (7.7 percent); Jackson, MS (6.7 percent) and Scranton, PA (6.5 percent).

The portion of mortgages that were seriously underwater nationwide during the second quarter of 2022 declined from the first quarter of 2022 in 101, or 95 percent, of the 107 metro areas with enough data to analyze. Seriously underwater rates decreased, year over year, in 102 of those 107 metros.

Among 8,708 U.S. zip codes that had at least 2,000 homes with mortgages in the second quarter of 2022, there were only 33 locations where more than 25 percent of mortgaged properties were seriously underwater. Of those, 14 were in Cleveland, OH; Detroit, MI and Philadelphia, PA.

The top five zip codes with the largest shares of seriously underwater properties in the second quarter of 2022 were 46408 in Gary, IN (47.7 percent of mortgaged homes were seriously underwater); 44108 in Cleveland, OH (46.6 percent); 66441 in Junction City, KS (44.9 percent); 10570 in Pleasantville, NY (44.8 percent) and 44112 in Cleveland, OH (42.9 percent).

Only about 214,800 homeowners were facing possible foreclosure in the second quarter of 2022, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 195,400, or 91 percent, had at least some equity built up in their homes.


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