US homeowners enjoyed an equity boost last quarter that saw the number of mortgages classified as “seriously underwater” drop to the lowest in at least five years, according to real estate data firm ATTOM.
The high housing prices that have led to talk of an “affordability crisis” are strengthening the equity buffer for owners. They held equity worth at least 50% of the property’s value in almost half of mortgaged homes last quarter — a high level by historical standards — according to ATTOM’s analysis of mortgage and deed of trust data on more than 150 million houses. Moreover around 40% of homes are fully owned.
Meanwhile the share of US homeowners with a “seriously underwater” mortgage dropped to five-year low of 2.4% last quarter, from 2.7% in the previous three months, according to ATTOM. Seriously underwater loans are defined as having a loan-to-value ratio of 125% or more, meaning the owner owed at least 25% more than the estimated market value.
“Homeowner wealth took a notable turn for the better during the second quarter,” said Rob Barber, CEO of ATTOM. “After a period where equity seemed stagnant or even declining, this brought another boost of good news for homeowners from the enduring housing market boom.”
Rising prices helped raise equity levels across most of the country in the period, by widening the gap between the estimated value of homes and the amounts homeowners owed on their loans.
By state, the share of underwater mortgages was lowest in Vermont and Rhode Island, at under 1%, and highest in Louisiana, Mississippi, and Kentucky.
Among major metro areas, the highest share was in Baton Rouge, Louisiana — at 11% — followed by New Orleans and Jackson, Mississippi. By contrast, four metros — Miami; San Diego; San Jose, California; and Providence, Rhode Island — had a share below 1%.
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