A little over a quarter of the country’s homes were considered “equity rich” by the end of the second quarter, according to ATTOM Data Solutions’ 2020 U.S. Home Equity & Underwater Report.
The report noted that for 15.2 million of the 55.2 million (27.5%) residences, the loans secured by those properties were at 50% or less of their estimated market value. That statistic is up 1 percentage point from the first quarter, according to the report.
A total of 3.4 million residences (6.2%) were considered “seriously underwater,” meaning that the loans were valued at 25% above the property’s estimated market value. That’s down from 6.6% in the previous quarter.
Forty-nine of 50 states saw growth in equity-rich homes, while just three states saw an increase in seriously underwater homes.
“Homeowners saw their equity rise far and wide throughout the United States during the second quarter of this year in yet another sign of the housing market punching back against the coronavirus pandemic. More property owners rose into equity-rich territory and escaped the seriously underwater lane, putting more money into the average household,” Todd Teta, chief product officer with ATTOM Data Solutions, said in a press release.
He noted that the housing market faces “enormous challenges,” despite the positive numbers, adding that the broader economy “contracted severely” in the second quarter. “If that continues, owner equity will be seriously threatened. But for now, homeowners are enjoying the gains when it comes to what, for most, is their most significant asset,” he said.
The equity building in homes across the country could help prevent a rash of coronavirus-related foreclosures, according to First American Chief Economic Odeta Kushi. She said in a recent report that economists predicted a 30% forbearance rate as a result of the coronavirus, but that peaked at 8.6% and continues to decline.
“Even so, forbearance does not equal foreclosure, and focusing on mortgage delinquency rates alone ignores the dual trigger responsible for foreclosure — economic hardship and lack of equity. The rising inability to pay in this crisis is unlikely to lead to large amounts of foreclosure activity because homeowners have more equity than ever before,” she said.