Nearly half of homeowners now are considered ‘equity-rich’ MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

Homes where the loan-to-value ratio is fifty percent or lower equity-rich homes are on the rise, which is good news for homeowners. According to ATTOM’s U.S. Home Equity & Underwater Report, forty nine percent of mortgaged residential properties in the United States were considered equity-rich at the end of this year’s second quarter. That means that nearly half of U.S. homeowners are maintaining at least fifty percent equity. That share is up two percent from Q1, when the portion of equity-rich, mortgaged homes reached forty seven percent at that point, the highest level seen in four years.

“The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put. Equity levels were high even during the recent downturn, and now they are going back up and better than ever,” ATTOM CEO Rob Barber said in a press release. Thanks to rising demand and continued, tight inventory, prices for both attached and detached homes rose across the U.S during Q2, reversing the market slowdown that began in mid-2022. The quarter ended with the country’s median home at value $350,000: a ten percent increase and all-time high.

However, Barber noted that the market remains in flux. “The recent improvement could easily be temporary. Lots of changing forces are at work affecting whether boom times are really back, especially amid a recent increase in mortgage rates. But with the 2023 peak buying season still underway, it seems that homeowners can reasonably expect their household balance sheets to grow a bit more in the near future.” During Q2, home equity rose in forty five of the fifty states, with the largest increases occurring throughout the Midwest. The greatest regional gain came in Wisconsin, where the share of equity-rich homes rose five point five to forty seven point one percent, followed by Michigan, with a five point two percent gain; South Dakota, with a five percent gain; and Ohio, with a four point six percent gain.

Meanwhile, the West remains the leader for equity-rich homes. Six of the top ten equity-rich states are in the West. The top state was Vermont, where seventy seven point five percent of homes are equity-rich, followed by California (sixty three point three percent), Montana (sixty point nine percent), Florida (sixty point four percent) and Idaho (fifty nine point four percent). At the same time, the number of seriously underwater mortgages also improved. Just two point eight percent of mortgaged homes were considered seriously underwater during Q2, down from three percent the prior quarter, and marking the lowest percentage since at least 2019. By ATTOM’s standards, any home where the loan-to-value ratio is one hundred and twenty five percent or higher is considered seriously underwater. So, as 2023 wears on, it appears that fewer property owners owe more than twenty five percent of their property’s estimated market value.

The rate of seriously underwater homes declined in thirty seven states overall, and like the growth in equity-rich homes, that change was steepest in the Midwest: a region that long held some of the highest shares of underwater homes. Missouri had the biggest percentage dip in the share of seriously underwater homes, dropping one point six percent quarter over quarter to four point eight percent; followed by Illinois, down one point three to five point one percent overall; South Dakota, down point eight percent; and Kansas and Ohio, which were both down point seven percent. One Midwestern state, however, posted the greatest increase in seriously underwater homes: Indiana. There, the share rose three point three percent quarter over quarter to eight point one percent. Still, most homeowners facing foreclosure have at least some home equity. During Q2, 255,700 U.S. homeowners faced possible foreclosure  about one in every two hundred and fifty mortgaged residential properties. And of those, ATTOM reported, ninety two percent had at least some equity built up in their homes.

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