Equity-Rich Portion of Mortgaged Homes Decreases While Seriously Underwater Level Rises;
Overall Equity for Homeowners Also Ticks Downward Amid Decline in Home Values;
But Nearly 95 Percent of Mortgaged Homeowners Still Have Equity Built Up
IRVINE, Calif. — Feb. 1, 2024 — ATTOM, a leading curator of land, property, and real estate data, today released its fourth-quarter 2023 U.S. Home Equity & Underwater Report, which shows that 46.1 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth 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 was equity-rich in the fourth quarter of 2023 decreased from 47.4 percent in the third quarter of 2023, marking the second straight quarterly decline. The latest figure also was down from 48 percent in the fourth quarter of 2022.
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 last few months of 2023, from 2.5 percent to 2.6 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.
“There are increasing signs suggesting that the extended period of prosperity in the U.S. housing market may be showing signs of easing,” said Rob Barber, CEO for ATTOM. “It’s not as if there are big warning signs flashing. Similar things were happening early last year before the market surged in the Spring. But the softening of equity follows a dip in resale profits last year for the first time in more than a decade as prices have stopped soaring through the roof. This year’s peak buying season will tell us a lot about whether things really have settled down long-term.”
The fourth quarter price decline capped off a year when the median home price grew annually by just 2 percent, marking the weakest growth since 2012 when the U.S. housing market was just starting to recover from the aftermath of the Great Recession that hit in the late 2000s. Prices grew at only a modest pace in 2023 amid a mixed scenario of rising mortgage rates that offset upward pressure from a tight supply of homes for sale, strong employment and a rising investment market.
The potential for more uneven equity trends remains in place as the housing market heads into its annual peak Spring and Summer buying season but faces elevated prices that remain a financial stretch for wide swaths of the potential buying public.
Equity-rich share of mortgages drops in most states
The portion of mortgages that were equity-rich decreased in 41 of the 50 U.S. states from the third quarter of 2023 to the fourth quarter of 2023, commonly by one to three percentage points. The biggest declines came in the Midwest and West regions, led by Missouri (portion of mortgages homes considered equity-rich decreased from 41.9 percent in the third quarter of 2023 to 37.3 percent in the fourth quarter of 2023), Minnesota (down from 39.5 percent to 35.9 percent), Michigan (down from 48.5 percent to 45.1 percent), Washington (down from 56.7 percent to 53.5 percent) and Utah (down from 56.8 percent to 53.7 percent).
At the other end of the scale, equity-rich levels rose in just nine states from the third quarter to the fourth quarter of last year, with the largest improvements concentrated in the Northeast region. The biggest increases were in Vermont (up from 79.8 percent to 82.8 percent), West Virginia (up from 30.5 percent to 32 percent), Wyoming (up from 39.9 percent to 41.2 percent), New Jersey (up from 45.9 percent to 46.8 percent) and Connecticut (up from 41.5 percent to 42.4 percent).
Seriously underwater mortgage levels up slightly in most states
The portion of mortgaged homes considered seriously underwater rose nationwide from one in 40 during the third quarter of 2023 to one in 38 during the fourth quarter. The ratio went up in 42 states, mostly by less than one percentage point.
The biggest increases were clustered in the Midwest and South, regions that already had some of the nation’s highest levels of seriously underwater mortgages. The largest quarterly increases were in Wyoming (share of mortgaged homes that were seriously underwater up from 5.9 percent in the third quarter of 2023 to 8.8 percent in the fourth quarter of 2023), Missouri (up from 3.9 percent to 5.6 percent), Oklahoma (up from 4.6 percent to 5.5 percent), North Dakota (up from 4.6 percent to 5.2 percent) and Illinois (up from 4.4 percent to 5.1 percent).
On the flip side, states where the percentage of seriously underwater homes decreased the most from the third to the fourth quarter of last year were Idaho (down from 2.7 percent to 2.3 percent), California (down from 1.6 percent to 1.3 percent), West Virginia (down from 4.6 percent to 4.4 percent), Texas (down from 2.4 percent to 2.2 percent) and Vermont (down from 0.9 percent to 0.7 percent).
Highest levels of equity-rich homeowners still in Northeast and West
Nine of the 10 states with the highest levels of equity-rich mortgaged properties around the U.S. during the fourth quarter of 2023 were in the Northeast or West regions. Those with the largest portions were Vermont (82.8 percent of mortgaged homes were equity-rich), Maine (60 percent), California (58.2 percent), New Hampshire (58 percent) Idaho (57.6 percent).
Nine of the 10 states with the lowest percentages of equity-rich properties during the fourth quarter of 2023 were in the Midwest or South. The smallest portions were in Louisiana (19.7 percent of mortgaged homes were equity-rich), Illinois (28 percent), Alaska (29.2 percent), Oklahoma (30 percent) and Maryland (30.2 percent).
Among 107 metropolitan statistical areas around the nation with a population of at least 500,000, the West and South again dominated the list of places with the highest portion of mortgaged properties that were equity-rich. All but four of the top 25 metros were in those regions during the fourth quarter of 2023, led by San Jose, CA (69.1 percent equity-rich); San Diego, CA (63.7 percent); Portland, ME (63.6 percent); Los Angeles, CA (63.5 percent) and San Francisco, CA (61.8. percent). The leader in the South region was Miami, FL (61.8 percent) while the top metro in the Midwest continued to be Grand Rapids, MI (51.7 percent).
The 15 metro areas with the lowest percentages of equity-rich properties in the fourth quarter of 2023 were in the Midwest or South. The smallest levels were in Baton Rouge, LA (13.8 percent of mortgaged homes were equity-rich); Little Rock, AR (26.1 percent); New Orleans, LA (26.2 percent); Des Moines, IA (26.9 percent) and Virginia Beach, VA (27.6 percent).
The portion of mortgaged homes considered equity rich declined from the third quarter of 2023 to the fourth quarter of 2023 in 80 of the 107 metro areas with sufficient data (75 percent) while the portion decreased from the fourth quarter of 2022 to the same period of 2023 in 67 percent.
Top equity-rich counties clustered in Midwest, Northeast and West
Among 1,738 counties that had at least 2,500 homes with mortgages in the fourth quarter of 2023, the top 30 equity-rich locations were in the Midwest, Northeast or West regions.
Counties with the highest share of equity-rich properties were Addison County (Middlebury), VT (88.7 percent equity-rich); Chittenden County (Burlington), VT (88.3 percent); Benzie County (Beulah), MI (87.6 percent); Washington County (Montpelier), VT (85.2 percent) and Manistee County, MI (82.9 percent).
Counties with populations of at least 500,000 and the highest equity-rich rates were Santa Clara County (San Jose), CA (70.1 percent equity-rich); San Mateo County, CA (69.9 percent); Orange County, CA (outside Los Angeles) (67 percent); Palm Beach County (West Palm Beach), FL (64.2 percent) and Alameda County (Oakland), CA (64.2 percent).
Seventeen of the 20 counties with the smallest share of equity-rich homes in the fourth quarter of 2023 were in the South. The lowest were in Campbell County (Gillette), WY (3.6 percent equity-rich); Vernon Parish (Leesville), LA (7.6 percent); Lincoln County, MS (south of Jackson) (8.7 percent); Ascension Parish, LA (outside Baton Rouge) (9.9 percent) and St. Bernard Parish (outside New Orleans) (10.1 percent).
Counties with populations of at least 500,000 and the smallest equity-rich portions were Baltimore City/County, MD (24.5 percent equity-rich); Cook County (Chicago), IL (25.6 percent); Lake County, IL (outside Chicago) (26.5 percent); Prince George’s County, MD (outside Washington, DC) (27.1 percent) and Anne Arundel County (Annapolis), MD (27.7 percent).
At least half of all mortgaged properties considered equity-rich in nearly 40 percent of zip codes
Among 9,081 U.S. zip codes that had at least 2,000 residential properties with mortgages in the fourth quarter of 2023, there were 3,412 (38 percent) where at least half the mortgaged properties were equity-rich.
Thirty-four of the top 50 zip codes were in California, Florida and Massachusetts. The largest shares were in zip codes 34102 in Naples, FL (86.8 percent of mortgaged properties were equity-rich); 83340 in Ketchum, ID (86.4 percent); 02539 in Edgartown, MA (85.1 percent); 94024 in Los Altos, CA (84.4 percent) and 92657 in Newport Coast, CA (84.4 percent).
Largest shares of seriously underwater mortgages remain in Midwest and South
The Midwest and South regions had nine the top 10 states with the highest shares of mortgages that were seriously underwater in the fourth quarter of last year. The top five were Louisiana (10.9 percent seriously underwater), Wyoming (8.8 percent), Mississippi (8 percent), Kentucky (6.3 percent) and Missouri (5.6 percent).
The smallest shares were in Vermont (0.7 percent seriously underwater), New Hampshire (1 percent), Rhode Island (1 percent), Massachusetts (1.2 percent) and California (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 fourth quarter of 2023 were Baton Rouge, LA (12.3 percent); New Orleans, LA (7.6 percent); St. Louis, MO (6.4 percent); Jackson, MS (6.1 percent) and Syracuse, NY (5.7 percent).
More than 20 percent of residential mortgages seriously underwater in just 36 zip codes
Among 9,081 U.S. zip codes that had at least 2,000 homes with mortgages in the fourth quarter of 2023, there were only 36 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 fourth quarter of 2023 were 82716 in Gillette, WY (88.4 percent of mortgaged homes were seriously underwater); 82718 in Gillette, WY (79.9 percent); 39601 in Brookhaven, MS (75.3 percent); 65265 in Mexico, MO (46 percent) and 39648 in McComb, MS (39.5 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 navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.
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