Roughly one-quarter, or 26.5 percent, of the 54.7 million mortgaged homes in the U.S. were equity-rich in Q1 2020, according to Attom Data Solutions’ Q1 2020 U.S. Home Equity & Underwater Report. That number decreased only slightly from the 26.7 percent of homes equity-rich during the fourth quarter of 2019.
Per Attom, properties considered equity-rich are properties under which the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.
Conversely, only 6.6 percent of mortgaged properties — about 3.6 million — were considered seriously underwater in the first quarter, or had a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value.
Although this data makes the market look relatively sunny, these figures were the last of data recorded prior to the coronavirus pandemic’s outbreak across the U.S., which went on to wreak havoc on the economy.
“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,” Todd Teta, chief product officer with Attom Data Solutions, said in a statement.
“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,” Teta added. “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 potential for home values to fall, there is a significant chance that equity levels could drop over the coming months while underwater levels rise.”
The Northeast and West produced the greatest number of equity-rich properties, with the top 10 states containing the highest share of these properties residing in these regions. California had the greatest share of equity-rich properties at 42.3 percent, followed by Hawaii (39.0 percent), Vermont (38.2 percent), Washington (36.6 percent) and Oregon (34.0 percent).
The states with the lowest percentage of equity-rich properties included Louisiana (13.5 percent equity-rich), Oklahoma (14.7 percent), Illinois (15.2 percent), Arkansas (16.3 percent) and Alabama (16.3 percent).
California encompassed the top five metro areas that contained the highest shares of equity-rich properties with a population greater than 500,000, including 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).
Baton Rouge, Louisiana (10.3 percent equity-rich); Columbia, South Carolina (13.5 percent); Little Rock, Arkansas (13.6 percent); Tulsa, Oklahoma (13.8 percent); and Dayton, Ohio (14.5 percent) all held the lowest number of equity-rich properties.
The majority of metro areas out of the 107 metros analyzed showed a decrease in equity-rich properties between Q4 2019 and Q1 2020. Overall, 69 metro areas saw a decreased in equity-rich properties while only 38 saw an increase in equity-rich properties.
Equity-rich counties were concentrated in the West and Northeast with 24 out of the top 25 equity-rich counties residing in these regions.
Out of 8,248 U.S. zip codes containing at least 2,000 properties with mortgages in Q1 2020, in 457 of those zip codes at least half of all properties were equity-rich. The vast majority of the top 50 most equity-rich zip codes were in California (48) and most were located in the San Francisco Bay area.
The South and Midwest were hit hardest by mortgages seriously underwater with Louisiana leading the share of seriously underwater properties at 17.3 percent of mortgages seriously underwater. Not far behind in proportion of seriously underwater properties were Mississippi (16.9 percent), West Virginia (15.7 percent), Iowa (14.2 percent) and Arkansas (13.0 percent).
The metro areas with the greatest proportion of seriously underwater mortgages included Youngstown, Ohio (17.0 percent); Baton Rouge, Louisiana (16.4 percent); Scranton, Pennsylvania (14.5 percent); Toledo, Ohio (14.3 percent); and Cleveland, Ohio (13.7 percent).
Out of the 8,248 U.S. zip codes with at least 2,000 properties with mortgages in the first quarter, in 157 of those zip codes at least one quarter of all properties with a mortgage were seriously underwater. Most of those zip codes were located in Cleveland, Ohio; Philadelphia, Pennsylvania; St. Louis, Missouri; Chicago, Illinois; and Rockford, Illinois metro areas.