A total of 17.8 million U.S. residential properties were considered equity-rich during the fourth quarter of 2020, according to Attom Data Solutions’ Q4 2020 Home Equity and Underwater Report.

A property is considered equity-rich if the combined estimated amount of loans secured by the property is 50 percent or less of its estimated market value.

Those properties represented 30.2 percent (one in three) of the 59 million total mortgaged homes in the U.S., up from 28.3 percent the previous quarter and up from 26.7 percent the year before.

Meanwhile, the number of mortgaged homes considered seriously underwater declined during the fourth quarter to 5.4 percent of all mortgaged homes, down from 6 percent in Q3 2020 and down from 6.4 percent in Q4 2019.

“Seriously underwater” homes are those with a combined estimated balance of loans secured by the property that’s at least 25 percent more than the property’s estimated market value.

Todd Teta, chief product officer with Attom Data Solutions, noted that fourth-quarter data reflected the continued optimism in the housing market that’s been seen consistently since the second quarter of 2020, once the peak of the pandemic’s uncertainty passed.

Todd Teta | Attom Data Solutions

“When it came to homeowner equity in the United States, the fourth quarter was more of the same as the third, which was more of the same as the second: a scenario that has continued to improve,” Teta said in a statement.

“The housing market kept booming despite damage caused by the virus pandemic to the broader economy — a surge that continued to boost the equity that most property owners have in their homes. As with many other housing-market metrics, the prospects for equity building even further in 2021 are wholly uncertain because of many questions surrounding the pandemic and the U.S. economy. But for now, homeowners are sitting pretty on a growing reserve of personal wealth.”

By region, Western states showed the biggest gains in equity-rich properties during this quarter. Six out of ten states that saw the largest gains in these properties were in the West, the top five being California (where equity-rich properties increased from 39.7 percent in Q3 2020 to 46.1 percent in Q4 2020), Idaho (from 39.5 to 42.7 percent), Montana (from 31.9 to 34.8 percent), Arizona (from 29.4 to 32.3 percent) and Vermont (from 45.1 to 47.8 percent).

Southern states, meanwhile, saw the greatest declines in underwater properties with West Virginia showing the sharpest decline of all with seriously underwater homes dropping from 13.8 percent the previous quarter to 11.4 percent.

Other states with significant declines in underwater properties included California (down from 3.7 to 2.4 percent), Mississippi (12.6 to 11.4 percent), Arkansas (11.7 to 10.4 percent) and New Jersey (6.7 to 5.7 percent).

Overall, the Northeast and West maintain the largest portion of equity-rich homes while the Midwest and South have the highest shares of seriously underwater homes.

States with the highest portion of equity-rich homes included Vermont (47.8 percent equity-rich), California (46.1 percent), Idaho (42.7 percent), Washington (41 percent) and Hawaii (40.4 percent).

Rick Sharga | RealtyTrac

At the opposite end of the spectrum, states with the greatest proportion of seriously underwater properties included Louisiana (14.9 percent underwater), Mississippi (11.4 percent), West Virginia (11.4 percent), Iowa (11.3 percent) and Arkansas (10.7 percent).

“The good news is that fewer and fewer homeowners across the country are underwater on their loans,” Rick Sharga, executive vice president of RealtyTrac, stated in Attom’s report. “But for those homeowners who are, the uncertainty of the economy during the pandemic looms large. The dual-trigger effect of losing a job and being underwater on a mortgage often unfortunately leads to a foreclosure.”

Email Lillian Dickerson

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