U.S. HOMEOWNER EQUITY REMAINS ELEVATED BUT DIPS DOWNWARD AGAIN IN FIRST QUARTER

Equity-Rich Portion of Mortgaged Homes Hits Two-Year Low While Seriously Underwater Level Climbs; Total Owner Equity Also Ticks Downward Again as Home Prices Dip

IRVINE, Calif., May 9, 2024 /PRNewswire/ — ATTOM, a leading curator of land, property, and real estate data, today released its first-quarter 2024 U.S. Home Equity & Underwater Report, which shows that 45.8 percent of mortgaged residential properties in the United States were considered equity-rich in the first quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.

The portion of mortgaged homes that were equity-rich in the first quarter of 2024 is down from 46.1 percent in the fourth quarter of 2023, marking the third straight quarterly decline. The latest figure also was down from 47.2 percent in the first quarter of 2023, hitting the lowest point in two years.

At the same time, the report shows that the portion of mortgaged homes that were seriously underwater in the U.S. rose slightly in the first few months of 2024, from 2.6 percent to 2.7 percent of all residential mortgages. Seriously underwater mortgages are those with combined estimated balances of loans secured by properties that are at least 25 percent more than those properties’ estimated market values.

“Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to help finance all kinds of things, from home renovations to business startups. Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated,” said Rob Barber, CEO for ATTOM. “It’s too early to make any broad statements about the market direction, especially coming off the typically slower Fall and Winter months. But amid the recent trends, this year’s Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing.”

The latest equity drop-offs emerged as the national median single-family home and condo value slipped 4 percent over the Winter and was up just a modest 3 percent year-over-year during the first quarter. When prices flatten out or drop, equity usually follows even as homeowners pay off mortgages. That’s because equity is based on mortgage debt as a portion of estimated property values.

Heading into the Spring buying season, the market faces a mix of forces that could drive it back up or hold it steady. Those forces include a tight supply of homes for sale and a strong investment market but also mortgage interest rates that have climbed back above 7 percent for a 30-year loan on top of home prices that remain a financial stretch for average wage earners.

Equity-rich share of mortgages declines quarterly in a majority of U.S.

The portion of mortgages that were equity-rich decreased in 26 of the 50 U.S. states from the fourth quarter of 2023 to the first quarter of 2024, commonly by less than two percentage points. Measured annually, equity-rich levels dropped from the first quarter of 2023 to the same period this year in 25 states.

The biggest quarterly declines came in the South regions, led by Kentucky (portion of mortgages homes considered equity-rich decreased from 35.4 percent in the fourth quarter of 2023 to 28.7 percent in the first quarter of 2024), South Carolina (down from 42.4 percent to 40 percent), Georgia (down from 46 percent to 43.7 percent), Delaware (down from 39.4 percent to 37.2 percent) and Indiana (down from 43 percent to 40.9 percent).

At the other end of the scale, equity-rich levels rose in 23 states from the fourth quarter of 2023 to the first quarter of 2024, mostly by less than one percentage point. The largest improvements were concentrated in the Midwest and West regions, led by South Dakota (up from 49.8 percent to 51.5 percent), Hawaii (up from 55 percent to 56.5 percent), Montana (up from 57.3 percent to 58.7 percent), North Dakota (up from 30.4 percent to 31.5 percent) and Mississippi (up from 37.3 percent to 38.3 percent).

Seriously underwater mortgage levels tick upward in most states

The portion of mortgaged homes considered seriously underwater rose slightly nationwide from one in 38 during the fourth quarter of last year to one in 37 during the first quarter of this year. The ratio went up in 37 states, mostly by less than one percentage point.

The biggest increases were clustered in the South, which already had some of the nation’s highest levels of seriously underwater mortgages. The largest quarterly increases were in Kentucky (share of mortgaged homes that were seriously underwater up from 6.3 percent in the fourth quarter of 2023 to 8.3 percent in the first quarter of 2024), West Virginia (up from 4.4 percent to 5.4 percent), Oklahoma (up from 5.5 percent to 6.1 percent), Arkansas (up from 5.2 percent to 5.7 percent) and Delaware (up from 2.3 percent to 2.7 percent).

On the flip side, states where the percentage of seriously underwater homes decreased most from the fourth quarter of 2023 to the first quarter of 2024 were Missouri (down from 5.6 percent to 4.5 percent), Mississippi (down from 8 percent to 7.1 percent), Arizona (down from 1.9 percent to 1.6 percent), Hawaii (down from 1.7 percent to 1.6 percent) and Tennessee (down from 2.9 percent to 2.8 percent).

Upscale markets in Northeast and West continue to have highest levels of equity-rich homeowners

Nine of the 10 states with the highest levels of equity-rich mortgaged properties around the U.S. during the first quarter of 2024 again were in the Northeast or West regions. Those with the largest portions were Vermont (82 percent of mortgaged homes were equity-rich), Maine (59.2 percent), Montana (58.7 percent), California (58.6 percent) and New Hampshire (57 percent).

Nine of the 10 states with the lowest percentages of equity-rich properties during the first quarter of 2024 were again in the Midwest or South. The smallest portions were in Louisiana (20.1 percent of mortgaged homes were equity-rich), Oklahoma (28.1 percent), Illinois (28.3 percent), Kentucky (28.7 percent) and Alaska (29.5 percent).

Among 107 metropolitan statistical areas around the nation with a population of at least 500,000, upscale markets where median home values topped $400,000 dominated the list of places with the highest portion of mortgaged properties that were equity-rich during the first quarter. (See ATTOM’s latest Q1 2024 home sales report).

They were led by San Jose, CA (69.3 percent equity-rich, with a first-quarter median home price of $1.4 million); Miami, FL (64.5 percent, with a median price of $440,000); Los Angeles, CA (64.3 percent, with a median price of $900,000); San Diego, CA (64.2 percent, with a median price of $835,000) and Portland, ME (63.2 percent, with a median price of $470,000).

The leader in the Midwest continued to be Grand Rapids, MI (53 percent, with a median price of $287,000).

The metro areas with the lowest percentages of equity-rich properties in the first quarter of 2024 were mainly in low-priced markets. The smallest levels were in Baton Rouge, LA (12.7 percent of mortgaged homes were equity-rich, with a first-quarter median home price of $212,533); Little Rock, AR (24 percent, with a median price of $197,000); Virginia Beach, VA (26.2 percent, with a median price of $305,000); and Tulsa, OK (27.6 percent, with a median price of $215,000).

The portion of mortgaged homes considered equity rich declined from the fourth quarter of 2023 to the first quarter of 2024 in 63 of the 107 metro areas with sufficient data (59 percent) while the portion decreased from the first quarter of 2023 to the same period of 2024 in 70 percent.

Top equity-rich counties remain in Midwest, Northeast and West

Among 1,743 counties that had at least 2,500 homes with mortgages in the first quarter of 2024, the top 25 equity-rich locations were in the Midwest, Northeast or West regions, with none located in the South.

Counties with the highest share of equity-rich properties were Chittenden County (Burlington), VT (88.6 percent equity rich); Benzie County (Beulah), MI (86.6 percent); Addison County (Middlebury), VT (86.3 percent); Washington County (Montpelier), VT (85.3 percent) and Manistee County, MI (85.2 percent).

Counties with populations of at least 500,000 and the highest equity-rich levels were Santa Clara County (San Jose), CA (70.2 percent equity-rich); San Mateo County, CA (69.8 percent); Orange County, CA (outside Los Angeles) (68.1 percent); Palm Beach County (West Palm Beach), FL (67.5 percent) and Miami-Dade County, FL (67.5 percent).

Twenty-three of the 25 counties with the smallest share of equity-rich homes in the first quarter of 2024 were in the South. The lowest were in Campbell County (Gillette), WY (3.9 percent equity-rich); Vernon Parish (Leesville), LA (7.9 percent); Ascension Parish, LA (outside Baton Rouge) (8 percent); Jefferson County (Mount Vernon), IL (8.2 percent) and Marshall County, WV (outside Pittsburgh, PA (8.9 percent).

Counties with populations of at least 500,000 and the smallest equity-rich portions were Baltimore City/County, MD (25.4 percent equity-rich); Prince George’s County, MD (outside Washington, DC) (26.2 percent); Cook County (Chicago), IL (26.5 percent); Jefferson County (Louisville), KY (26.7 percent) and Anne Arundel County (Annapolis), MD (27.9 percent).

At least half of all mortgaged properties considered equity-rich in more than one-third of zip codes

Among 9,101 U.S. zip codes that had at least 2,000 residential properties with mortgages in the first quarter of 2024, there were 3,334 (37 percent) where at least half the mortgaged properties were equity-rich.

Among the top 50 zip codes, 32 were in California or Florida. The largest shares were in zip codes 83340 in Ketchum, ID (86.4 percent of mortgaged properties were equity-rich); 49855 in Marquette, MI (84.9 percent); 92657 in Newport Coast, CA (84.8 percent); 93108 in Santa Barbara, CA (84.6 percent) and 94024 in Los Altos, CA (84.2 percent).

Midwest and South have largest shares of seriously underwater mortgages

The Midwest and South regions had nine of the top 10 states with the highest shares of mortgages that were seriously underwater in the first quarter of this year. The top five were Louisiana (11.3 percent seriously underwater), Wyoming (8.8 percent), Kentucky (8.3 percent), Mississippi (7.1 percent) and Oklahoma (6.1 percent).

The smallest shares were in Vermont (0.8 percent seriously underwater), Rhode Island (1.1 percent), New Hampshire (1.1 percent), California (1.2 percent) and Massachusetts (1.3 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 first quarter of 2024 were Baton Rouge, LA (13.4 percent); New Orleans, LA (7.3 percent); Jackson, MS (6.5 percent); Little Rock, AR (6 percent) and Syracuse, NY (5.6 percent).

More than 20 percent of residential mortgages seriously underwater in just 40 zip codes

Among 9,101 U.S. zip codes that had at least 2,000 homes with mortgages in the first quarter of 2024, there were only 40 locations where more than 20 percent of mortgaged properties were seriously underwater.

The top five zip codes with the largest shares of seriously underwater properties in the first quarter of 2024 were 82716 in Gillette, WY (87 percent of mortgaged homes were seriously underwater); 82718 in Gillette, WY (79.2 percent); 62864 in Mount Vernon, IL (55 percent); 42728 in Columbia, KY (49.3 percent) and 42445 in Princeton, KY (42.2 percent).

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.

Definitions

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

ATTOM 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 real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include ATTOM Cloud, bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, making property data more readily accessible and optimized for AI applications– AI-Ready Solutions.