U.S. Homeowners Remain Four Times As Likely To Be Equity-Rich Than Seriously Underwater

IRVINE, Calif., May 7, 2020 /PRNewswire/ -- ATTOM Data Solutions, curator of the nation's premier property database and first property data provider of Data-as-a-Service (DaaS), today released its first-quarter 2020 U.S. Home Equity & Underwater Report, which shows that 14.5 million residential properties in the United States were considered equity-rich, meaning the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.

The count of equity-rich properties in the first quarter of 2020 represented 26.5 percent, or about one in four, of the 54.7 million mortgaged homes in the U.S. That percentage was down slightly from the 26.7 percent level in the fourth quarter of 2019.

The report also shows that just 3.6 million, or one in 15, mortgaged homes in the first quarter of 2020 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property's estimated market value. That figure represented 6.6 percent of all U.S. properties with a mortgage, up slightly from 6.4 percent in the prior quarter.

The figures were derived from the last data recorded before the economic fallout from the Coronavirus pandemic began to sweep across the U.S., potentially damaging the nation's housing market.

"Homeowners' balance sheets generally remained strong in the first quarter of 2020 across the U.S., with about the same levels of equity-rich or seriously underwater mortgages as in the prior quarter. In the latest marker of the ongoing housing market boom, mortgage payers were four times as likely to have homes worth considerably more than what they owed on their loans than considerably less," said Todd Teta, chief product officer with ATTOM Data Solutions. "But as with other rosy first-quarter reports, this one needs to be taken in the context of the looming impact of the Coronavirus pandemic. With the potential for home values to fall, there is a significant chance that equity levels could drop over the coming months while underwater levels rise."

Highest equity-rich shares remain in the Northeast and West

The top 10 states with the highest share of equity-rich properties in the first quarter of 2020 were all in the Northeast and West regions, led by California (42.3 percent equity-rich), Hawaii (39.0 percent), Vermont (38.2 percent), Washington (36.6 percent) and Oregon (34.0 percent).

States with the lowest percentage of equity-rich properties were Louisiana (13.5 percent equity-rich), Oklahoma (14.7 percent), Illinois (15.2 percent), Arkansas (16.3 percent) and Alabama (16.3 percent). Those were the same states with the five lowest levels in the fourth quarter of 2019.

Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those top 5 metro areas with the highest shares of equity-rich properties in the first quarter of 2020 were all in California: San Jose (64.8 percent equity-rich), San Francisco (57.0 percent), Los Angeles (47.4 percent), Santa Rosa (45.5 percent) and San Diego (40.0 percent). The leader in the Northeast region again was Boston, MA, (34.8 percent) while Dallas-Fort Worth, TX, again led the South (36.6 percent) and Grand Rapids, MI, continued to lead in the Midwest (26.4 percent).

Metro areas with the lowest percentage of equity-rich properties were Baton Rouge, LA (10.3 percent equity-rich); Columbia, SC (13.5 percent); Little Rock, AR (13.6 percent); Tulsa, OK (13.8 percent) and Dayton, OH (14.5 percent).

Among the 107 metro areas, 38 metro areas (35.5 percent) showed an increase in levels of equity-rich properties from the fourth quarter of 2019 to the first quarter of 2020; while 69 metro areas (64.5 percent) showed a decrease.

Top equity-rich counties concentrated in West and Northeast

Among the 1,463 counties with at least 2,500 properties with mortgages in the first quarter of 2020, 24 of the top 25 equity-rich locations were in the West or Northeast regions, with the highest concentration in California.

Counties with the highest shares of equity-rich properties were San Mateo County (outside San Francisco), CA (72.3 percent equity-rich); San Francisco County, CA (69.6 percent); Santa Clara County (San Jose), CA (65.7 percent); Alameda County (outside San Francisco), CA (57.8 percent) and Dukes County (Martha's Vineyard), MA (54.8 percent).

More than 50 percent of all properties were equity-rich in 457 zip codes

Among 8,248 U.S. zip codes with at least 2,000 properties with mortgages in the first quarter of 2020, there were 457 zip codes where at least half of all properties with a mortgage were equity rich.

Forty-eight of the top 50 were in California, with most in the San Francisco Bay area. They were led by zip codes 94116 in San Francisco (82.0 percent equity-rich), 94122 in San Francisco (81.3 percent), 94040 in Mountain View (80.0 percent), 94112 in San Francisco (78.9 percent) and 94087 in Sunnyvale (78.4 percent). The same zip codes were in the top five in the fourth quarter of 2019.

Highest seriously underwater shares remain in the South and Midwest

The top 10 states with the highest shares of mortgages that were seriously underwater in the first quarter of 2020 were all in the South and Midwest regions, led by Louisiana (17.3 percent seriously underwater), Mississippi (16.9 percent), West Virginia (15.7 percent), Iowa (14.2 percent) and Arkansas (13.0 percent).

Among the 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those with the highest share of mortgages that were seriously underwater in the first quarter of 2020 were Youngstown, OH (17.0 percent); Baton Rouge, LA (16.4 percent); Scranton, PA (14.5 percent); Toledo, OH (14.3 percent) and Cleveland, OH (13.7 percent).

Among the 107 metro areas, 65 metro areas (60.7 percent) showed an increase in levels of underwater properties from the fourth quarter of 2019 to the first quarter of 2020; while 42 metro areas (39.3 percent) showed a decrease.

More than 25 percent of all properties were seriously underwater in 157 zip codes

Among 8,248 U.S. zip codes with at least 2,000 properties with mortgages in the first quarter of 2020, there were 157 zip codes where at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in the Cleveland, OH; Philadelphia, PA; St. Louis, MO; Chicago, IL, and Rockford, IL, metropolitan statistical areas.

The top five zip codes with the highest shares of seriously underwater properties were 71446 in Leesville, LA (65.1 percent seriously underwater); 08611 in Trenton, NJ (59.8 percent); 53206 in Milwaukee, WI (59.2 percent); 44110 in Cleveland, OH (58.6 percent); and 08104 in Camden, NJ (54.6 percent).

Report methodology

The ATTOM Data Solutions 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 Data Solutions nationwide for more than 155 million U.S. properties. The ATTOM Data Solutions Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process.  ATTOM Data Solutions 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 Data Solutions

ATTOM Data Solutions 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 data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 9TB 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, marketing lists, match & append and introducing the first property data delivery solution, a cloud-based data platform that streamlines data management – Data-as-a-Service (DaaS).

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