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 Small Equity Gain Results in Nearly Half of U.S. Mortgaged Homes Now Considered Equity-Rich; Seriously Underwater Portion of Mortgages Stays Just Below 3 Percent; Seventeen Times as Many Mortgages are Equity Rich versus Seriously Underwater

IRVINE, Calif. — Nov. 3, 2022 — ATTOM, a leading curator of real estate data nationwide for land and property data, today released its third-quarter 2022 U.S. Home Equity & Underwater Report, which shows that 48.5 percent of mortgaged residential properties in the United States were considered equity-rich in the third quarter, 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 third quarter of 2022 increased from 48.1 percent in the second quarter of 2022 and from 39.5 percent in the third quarter of 2021. The latest increase fell below other gains in recent years. But it still marked the 10th straight quarterly rise, and resulted in virtually half of all mortgage payers landing in equity-rich territory. The report found that at least half of all mortgage-payers in 20 states were equity-rich in the third quarter, compared to only seven states a year earlier.

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“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.”

The report also shows that just 2.9 percent of mortgaged homes, or one in 35, were considered seriously underwater in the third 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. The latest seriously underwater figure was the same as the 2.9 percent recorded in the prior quarter, but down from 3.4 percent, or one in 29 properties, in the third quarter of 2021.

Overall, 94.3 homeowners paying off mortgages had at least some equity built up in the third quarter of this year, compared to 92.9 percent a year earlier and 87.7 percent in the third quarter of 2020. That level rises further when accounting for homeowners who have paid off their mortgages.

Across the country, 39 states saw equity-rich levels increase from the second quarter of 2022 to the third quarter of 2022, while seriously underwater percentages dipped in 38 states. Year over year, equity-rich levels rose in all 50 states and seriously underwater portions dropped in 43 states.

The ongoing, but relatively small, improvement in home equity during the third quarter of 2022 came as the U.S. housing market cooled considerably amid multiple forces that threaten to stifle or reverse an 11-year run of nearly uninterrupted price spikes and equity gains.

Largest increases in equity-rich share of mortgages spread across Midwest, Northeast and South

Nine of the 10 states where the equity-rich share of mortgaged homes increased most from the second quarter of 2022 to the third quarter of 2022 were in the Midwest, Northeast and South regions of the U.S. The biggest increases were in South Dakota, where the portion of mortgaged homes considered equity-rich rose from 36.7 percent in the second quarter to 41.8 percent in the third quarter, Vermont (up from 71.4 percent to 75.9 percent), Montana (up from 48.1 percent to 51.5 percent), Indiana (up from 43 percent to 46.2 percent) and Mississippi (up from 29.1 percent to 31.5 percent).

The top five states where the equity-rich share of mortgaged homes decreased the most from the second quarter to the third quarter of this year were all in the West, led by Idaho (down from 69.5 percent to 65.8 percent), California (down from 63.1 percent to 60.6 percent), Utah (down from 64.3 percent to 62 percent), Washington (down from 63.2 percent to 61 percent) and Arizona (down from 64.8 percent to 63.4 percent).

Largest declines in seriously underwater properties located across Midwest, Northeast and West

The top 10 states with the biggest decreases in the percentage of mortgaged homes considered seriously underwater from the second quarter of 2022 to the third quarter of 2022 were spread across the Midwest, Northeast and West. They were led by Wyoming (share of mortgaged homes seriously underwater down from 7 percent to 2.9 percent), Montana (down from 3.9 percent to 3 percent), Kansas (down from 5.7 percent to 4.9 percent), Indiana (down from 3.8 percent to 3.1 percent) and Connecticut (down from 3.3 percent to 2.8 percent).

States where the percentage of seriously underwater homes increased the most from the second quarter to the third quarter of this year were concentrated in the West. While most of the increases were minimal, the largest were in Mississippi (up from 8.1 percent to 9 percent), California (up from 1 percent to 1.4 percent), Idaho (up from 1.6 percent to 1.9 percent), Hawaii (up from 1.3 percent to 1.5 percent) and Washington (up from 1 percent to 1.2 percent).

Equity-rich homeowners still concentrated in West

The highest levels of equity-rich properties around the U.S. remained in the West during the third quarter of 2022, with six of the top 10 states located in that region. The top states were Vermont (75.9 percent of mortgaged homes were equity-rich), Idaho (65.8 percent), Arizona (63.4 percent), Florida (62.8 percent) and Utah (62 percent).

Nine of the 10 states with the lowest percentages of equity-rich properties in the third quarter of 2022 were in the Midwest and South. The smallest portions were in Louisiana (24.5 percent of mortgaged homes), Illinois (26.3 percent), Alaska (26.7 percent), West Virginia (29.3 percent) and North Dakota (30.9 percent).

Among 107 metropolitan statistical areas around the nation with a population greater than 500,000, both the West and South dominated the list with the highest portion of mortgaged properties that were equity-rich in the third quarter of 2022. All but one of the top 25 were in those regions, led by Austin, TX (71.6 percent equity-rich); Sarasota-Bradenton, FL (71.6 percent); San Jose, CA (70.6 percent); Fort Myers, FL (68.5 percent) and Tampa, FL (68.3 percent). The leader in the Northeast region again was Portland, ME (63 percent) while the top metro in the Midwest continued to be Grand Rapids, MI (51.9 percent).

Eighteen of the 20 metro areas with the lowest percentages of equity-rich properties in the third quarter of 2022 were in the Midwest and South. The smallest levels were in Baton Rouge, LA (20.6 percent of mortgage homes were equity-rich); Jackson, MS (23.4 percent); Wichita, KS (26.1 percent); Little Rock, AR (27.4 percent) and Virginia Beach, VA (27.9 percent).

The portion of mortgaged homes considered equity rich rose from the second quarter of 2022 to the third quarter of 2022 in 72 of the 107 metro areas with sufficient data (68 percent), while the level of mortgaged homes considered equity rich rose annually in 105 of the 107 (99 percent).

Top equity-rich counties located in Northeast, South and West

Among 1,627 counties that had at least 2,500 homes with mortgages in the third quarter of 2022, 47 of the top 50 equity-rich locations were in the Northeast, South and West.

Counties with the highest share of equity-rich properties were Chittenden County (Burlington), VT (85.2 percent equity-rich); Dukes County (Martha’s Vineyard), MA (84.7 percent); Blaine County, ID (outside Boise) (84.4 percent); Portage County, WI (west of Green Bay) (84.3 percent) and Nantucket County, MA (80.2 percent).

Counties with populations of at least 500,000 and the highest equity-rich rates were Travis County (Austin), TX (74.1 percent equity-rich); Pinellas County (Tampa), FL (72.6 percent); Santa Clara County (San Jose), CA (71.5 percent); San Mateo County, CA (outside San Francisco) (69.6 percent) and Williamson County, TX (outside Austin) (69.6 percent).

Counties with the smallest share of equity-rich homes in the third quarter of 2022 were Geary County (Junction City), KS (7.3 percent equity rich); Vernon Parish, LA (northwest of Lafayette) (9.2 percent); Iberville Parish, LA (outside Baton Rouge) (12.9 percent); Cumberland County (Fayetteville), NC (12.9 percent) and Lowndes County, MS (west of Birmingham, AL) (13.1 percent).

Counties with populations of at least 500,000 and the smallest equity-rich portions were Lake County, IL (outside Chicago) (25.4 percent equity-rich); Cook County (Chicago), IL (26.6 percent); Sedgwick County (Wichita), KS (27.1 percent equity-rich); Baltimore County, MD (27.3 percent) and Kane County, IL (outside Chicago (27.4 percent).

At least half of all properties considered equity-rich in almost 50 percent of zip codes

Among 8,716 U.S. zip codes that had at least 2,000 residential properties with mortgages in the third quarter of 2022, there were 4,014 (46 percent) where at least half the mortgaged properties were equity-rich.

Thirty-two of the top 50 were in Florida and Texas, with six of the top 10 in Dukes County, MA, and Collier County, TX. They were led by zip codes 83333 in Hailey, ID (87.7 percent of mortgaged properties were equity-rich); 02539 in Edgartown, MA (86.9 percent); 34108 in Naples, FL (85.2 percent); 02568 in Vineyard Haven, MA (84.9 percent) and 34102 in Naples, FL (84.9 percent).

South and Midwest still with largest shares of seriously underwater properties

The top 10 states with the highest shares of mortgages that were seriously underwater in the third quarter of 2022 were in the South and Midwest. The top five were Louisiana (10.8 percent seriously underwater), Mississippi (9 percent), Iowa (6.5 percent), Illinois (6.2 percent) and Kentucky (6 percent).

The smallest shares were in Vermont (0.9 percent seriously underwater), Rhode Island (1.1 percent), Florida (1.2 percent), Washington (1.2 percent) and New Hampshire (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 third quarter of 2022 were Baton Rouge, LA (10.7 percent); Jackson, MS (8.9 percent); New Orleans, LA (7.8 percent); Syracuse, NY (6.3 percent) and Scranton, PA (6.2 percent).

The portion of mortgages that were seriously underwater nationwide declined from the second quarter of 2022 to the third quarter of 2022 declined in 58, or 55 percent, of the 107 metro areas with enough data to analyze. Seriously underwater rates decreased, year over year, in 91 of those 107 metros (86 percent).

More than 25 percent of residential properties seriously underwater in just 24 zip codes

Among 8,716 U.S. zip codes that had at least 2,000 homes with mortgages in the third quarter of 2022, there were only 24 locations where more than 25 percent of mortgaged properties were seriously underwater. Of those, nine were in Cleveland, OH, and Philadelphia, PA.

The top five zip codes with the largest shares of seriously underwater properties in the third quarter of 2022 were 66441 in Junction City, KS (46.7 percent of mortgaged homes were seriously underwater); 39702 in Columbus, MS (45.7 percent); 10570 in Pleasantville, NY (45.1 percent); 44108 in Cleveland, OH (43.1 percent) and 44112 in Cleveland, OH (38.7 percent).

Vast majority of homeowners facing foreclosure have at least some equity

Only about 227,100 homeowners were facing possible foreclosure in the third quarter of 2022, or just four-tenths of one percent of the 58.1 million outstanding mortgages in the U.S. Of those facing foreclosure, about 208,700, or 92 percent, had at least some equity built up in their homes.

“One of the reasons we don’t believe there will be another huge wave of foreclosures is that the overwhelming majority of financially-distressed homeowners do have positive equity,” Sharga noted. “If these borrowers can’t leverage the equity to refinance their current mortgage, they at least have the option of selling the property rather than losing their equity to a foreclosure auction. This option wasn’t available to distressed borrowers during the Great Recession, when many borrowers were underwater on their loans.”

States where the largest portion of homeowners facing possible foreclose had equity in their properties in the third quarter of 2022 included Utah (98 percent with equity), Washington (97 percent), Colorado (97 percent), Nevada (97 percent) and Arizona (97 percent). States with the lowest percentages included Mississippi (75 percent with equity), Louisiana (80 percent), Illinois (85 percent), Maryland (85 percent) and Missouri (87 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 bulk file licenses, property data APIs, real estate market trends, property reports and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.

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