ATTOM: Nearly half of all US properties considered equity-rich

by Liz Hughes

Nearly half of all homeowners in the U.S. have equity-rich properties, meaning they own  at least 50% of their homes’ equity, according to ATTOM’s fourth-quarter 2022 U.S. Home Equity & Underwater Report.

Forty-eight percent of mortgaged homes were equity rich in the fourth quarter of last year, down from 48.5% in the third quarter but up from 41.9% a year earlier. 

The report notes that while nationally, equity-rich levels are nearly double what they were a few years ago, “the drop-off in the last three months of 2022 reversed a string of 10 straight quarterly gains.” The number of equity-rich mortgage payers fell in 31 states from the third to the fourth quarter of 2022. That drop-off, according to ATTOM, marks the first signs of how falling home prices are affecting homeowners following a “decade-long market boom.”

ATTOM CEO Rob Barber says dents are starting to “surface in the armor” around the county’s housing market after 11 years of a “strong showing” for owners. 

“Home values have been dropping since the middle of last year, which appears to be starting to cut into homeowner equity around the country,” Barber said. “That’s probably happening because values are sinking faster than owners are paying off their mortgages. How that shakes out over the next few months will depend on a lot of factors, including where interest rates go. But for now, it looks like the runup in wealth flowing from owning homes has stalled along with the market.”

ATTOM found the largest drops in equity-rich shares of mortgages in the fourth quarter were spread across the West. Idaho led the declines, with homeowner equity falling from 65.8% in the third quarter to 61.6% in the fourth; Arizona was down from 63.4% to 59.9%; Nevada fell from 55.8% to 52.3%; Washington from 61% to 58.5%; and Oregon from 55% to 53.2%.

Of the top 10 states with the biggest increases in the equity-rich share of mortgaged homes from the third to fourth quarters, five were in the South. The largest increases were seen in Montana, at 58% from the third quarter’s 51.5%, Kansas at 37% from 34%, Delaware at 35.9% from 34.2%, Mississippi at 33.2% from 31.5% and Arkansas at 38% from 36.6%.

Homes considered “seriously underwater” remained historically low throughout most of the country in the fourth quarter. The report found 2.9%, or one in 34 mortgages, were seriously underwater in the last quarter of 2022, meaning those homeowners owed at least 25% more than market value. That number was unchanged from the previous quarter, but still down from 3.1% in the fourth quarter of 2021.

Overall, the report found 94.1% of homeowners had some equity in the fourth quarter, a slight decrease from the third quarter’s 94.3% but up from 93.5% a year earlier and 88.8% in 2020.

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