According to Q3 2024 U.S. Home Equity & Underwater Report released by ATTOM, some 48.3% of mortgaged residential properties in the US were deemed equity-rich in Q3, which means that the total estimated amount of loan balances secured by those properties was no more than half of their estimated market values.
From a recent peak of 49.2% in Q2 of 2024, that level was lower. Nonetheless, it remained at a historically high level and was up from 47.4% a year earlier, illustrating one of the long-lasting consequences of a nationwide housing market boom that has lasted for more than 10 years.
Regarding the percentage of home mortgages that were significantly underwater, a similar trend surfaced during the third quarter. The combined estimated balances of loans secured by properties that are at least 25% higher than the projected market values of such properties only accounted for 2.5% of mortgaged residences. Compared to the 2.4% recorded in the previous quarter and the third quarter of 2023, that was marginally worse.
“Homeowner equity typically mirrors home-price trends, and the third quarter of this year followed that pattern. Equity remained elevated as the value of residential properties has surged consistently over the years. However, it held steady this quarter, reflecting the cooling of earlier sharp price increases,” said Rob Barber, CEO for ATTOM. “Despite the flat pattern, home equity keeps providing a significant boost to the economy in the form of financial leverage that tens of millions of households can use to finance major purchases or investments.”
He added that “we can expect to see small movements up or down over the coming months as the housing market moves into its annual slow season.”
The most recent equity pattern occurs when the market is still robust over the majority of the country, but it is also subject to a number of factors that might either keep it rising or flatten it down. The percentage of equity-rich mortgaged residences in the third quarter of 2024 (48.3%) was still significantly higher than the 26.5% level observed in the first quarter of 2020. From the second quarter to the third quarter of 2024, it fell by less than two percentage points in 28 of the 50 U.S. states, although it remained upward annually in 37 states.
Annual increases generally tilted more toward low- and mid-priced markets around the country, concentrated in the Midwest and Northeast regions. The increases were led by:
- Vermont (portion of mortgaged homes considered equity-rich increased from 79.8% in Q3 of 2023 to 86.4% in Q3 of 2024)
- West Virginia (up from 30.5% to 37%)
- Connecticut (up from 41.5% to 47.7%)
- New Jersey (up from 45.9% to 52%)
- Rhode Island (up from 54.7% to 60.6%)
In Most States, Seriously Underwater Mortgage Levels Fluctuate Little by Little
Conversely, equity-rich levels decreased more frequently in western states, mostly in Utah (from 56.8% to 52.4% year-over-year), Arizona (from 54.3% to 50%), Colorado (from 51.1% to 48%), Washington (from 56.7% to 54.6%), and Oregon (from 52.7% to 50.8%).
During Q3, the percentage of mortgaged properties in the United States that are deemed substantially underwater hardly changed. At one in 40, it was unchanged from one in 42 in the second quarter but the same as a year earlier. It was also far lower than the one in 15 ratio that was noted in 2020. While it was still improved annually in 24 states, the rate deteriorated every three months in 30 states.
West Virginia (down from 4.6% to 3.8%), Louisiana (down from 10.8% to 10.1%), Illinois (down from 4.4% to 4.1%), New Jersey (down from 1.9% to 1.6%), and Wyoming (down from 5.9% in Q3 of 2023 to 2.4% in Q3 of 2024) saw the largest annual improvements in seriously underwater mortgages.
The largest year-over-year increases in the percentage of seriously underwater homes during Q3 of 2024 were in Kansas (up from 2.6% to 4.4%), Utah (up from 1.8% to 2.4%), South Dakota (up from 2.6% to 3.1%), Missouri (up from 3.9% to 4.3%) and Colorado (up from 1.7% to 2%).
High-End Markets Clustered in Northeast, West Continues to Benefit from Best Equity-Rich Rates
Once more, in Q3 2024, the Northeast and West states had the biggest concentrations of equity-rich mortgaged houses in the United States. The states with the biggest percentages were Rhode Island (60.6%), Maine (62.2%), New Hampshire (61.1%), Montana (60.5%), and Vermont (86.4% of mortgaged residences were equity-rich).
The Midwest and South accounted for nine of the ten states with the lowest percentages of equity-rich properties in Q3 2024. Alaska (31.9%), North Dakota (33.2%), Maryland (33.2%), Illinois (34%), and Louisiana (21.1% of mortgaged homes were equity-rich) had the least percentages.
The largest percentage of mortgaged houses that were equity-rich during the third quarter was found in premium markets with median property values over $450,000, out of 107 metropolitan statistical regions with a population of at least 500,000 in the country. property Seller Profit Margins Fall Slightly Across U.S. as Housing Market Slows During Third Quarter, according to this ATTOM analysis on property values.
San Jose, CA (68.7% equity-rich, with a median home price of $1.5 million in Q3); Portland, ME (64.6%, with a median price of $520,000); San Diego, CA (64.1%, with a median price of $885,000); Los Angeles (63.9%, with a median price of $949,375); and Buffalo, NY (63.7%, with a median price of $268,000) were the top four.
The leader in the South was Knoxville, TN (60.7%, with a median price of $345,949) while the Midwest was led again by Grand Rapids, MI (55%, with a median price of $327,520). Metro areas with the lowest percentages of equity-rich properties in Q3 of 2024 remained mostly in lower-priced markets of the South and Midwest.
The smallest levels were found in:
- Baton Rouge, LA (15.8% of mortgaged homes were equity-rich, with a third-quarter median home price of $223,564)
- New Orleans, LA (26.9%, with a median price of $242,900)
- Little Rock, AR (30.1%, with a median price of $215,844)
- Virginia Beach, VA (30.2%, with a median price of $330,000)
- Jackson, MS (30.2%, with a median price of $285,407)
Top Equity-Rich Counties Again Concentrated in Midwest
Among 1,751 counties that had at least 2,500 homes with mortgages in the third quarter of 2024, 14 of the top 20 equity-rich locations were spread across the Midwest, with Michigan leading the way.
Counties with the highest share of equity-rich properties were Chittenden County (Burlington), VT (91.9% equity rich); Benzie County (Beulah), MI (90.9%); Portage County (Stevens Point), WI (88.8%); Manistee County, MI (88.8%) and Washington County (Montpelier), VT (88.5%).
Some 19 of the 20 counties with the smallest share of equity-rich homes in Q3 of 2024 were in the South. The lowest were in Vernon Parish (Leesville), LA (7% equity rich); Long County, GA (south of Savannah) (9.5%); Ascension Parish, LA (outside Baton Rouge) (11.3%); Acadia Parish, LA (outside Lafayette) (12.5%) and Bossier Parish, LA (13.7%).
Midwest and South Have the Most Seriously Underwater Mortgage Rates
The Midwest and South regions had 19 of the 20 states with the highest shares of mortgages that were seriously underwater in Q3 of this year. The top five were Louisiana (10.1% seriously underwater), Mississippi (7.2%), Kentucky (5.5%), Arkansas (5.4%) and Iowa (5.2%).
The smallest shares were in Vermont (0.7% seriously underwater), Rhode Island (0.9%), New Hampshire (1%), Massachusetts (1.1%) and California (1.4%). Among different regions, one of every 29 mortgaged homes was seriously underwater in the Midwest, one of every 37 in the South, one of every 50 in the Northeast and one of every 61 in the West.
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 2024 were Baton Rouge, LA (11.1%); New Orleans, LA (7.4%); Jackson, MS (6.6%); Kansas City, MO (5.5%) and Little Rock, AR (5.2%). The portion of mortgages that were seriously underwater increased quarterly in 80, or 75%, of the metro areas in the U.S. with enough data to analyze. They were up, year-over-year, in 61% of the metro areas analyzed.
To read the full report, including more data, charts, and methodology, click here.
The post How Many U.S. Homeowners Remain Equity-Rich? first appeared on The MortgagePoint.
