Nearly one of every two mortgaged homes is considered “equity rich,” according to recent data from ATTOM Data Solutions, which released its Q1 2022 U.S. Home Equity & Underwater Report on Thursday.
The report found that 44.9% of mortgaged residential properties in the United States were considered equity-rich. This is defined as homes with a combined estimated amount of loan balances secured by those properties that were no more than 50% of their estimated market values.
In the first three months of the year, the portion of equity-rich mortgaged homes inched up from 41.9% in the fourth quarter of 2021 and from 31.9% year over year.
The report shows that just 3.2% of mortgaged homes—one in 31—were considered “seriously underwater” in the first quarter of 2022, virtually unchanged from 3.1% in the fourth quarter of 2021 and 4.7%, or one in 21 properties, a year earlier.
Major highlights
- Forty-five states increased equity-rich levels from Q4 2021 to Q1 2022, while seriously underwater percentages increased in 28 states.
- Year–over-year equity-rich levels rose in 48 states, and seriously underwater portions dropped in 46 states during Q1 2022.
- Median home prices rose 2% in the U.S. to $320,500 in Q1 2022.
- The most significant improvements in equity-rich share of mortgages were in the western and southern regions.
- Markets with the largest increases were New Mexico, Florida, California, South Carolina and Montana.
- Twelve of the 15 states with the biggest increases in the percentage of mortgaged homes considered seriously underwater were in the South and Midwest.
- The western region experienced the largest shares of equity-rich homes, while the midwest and south saw the smallest.
- The Southern and Midwestern ideas saw the largest shares of seriously underwater properties.
The takeaway:
“Homeowners continue to benefit from rising home prices,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “Record levels of home equity provide financial security for millions of families and minimize the chance of another housing market crash like the one we saw in 2008. But these higher home prices and rising interest rates make it extremely challenging for first-time buyers to enter the market.”
“It’s likely that equity will continue to grow through the rest of 2022, although home price increases should moderate as the year goes on. Rising interest rates, the highest inflation in 40 years, and the ongoing supply chain disruptions due to the war in Ukraine are likely to weaken demand and slow down home price appreciation.”
“Positive equity should give financially distressed homeowners better options than their counterparts had during the Great Recession when 33% of all homeowners were underwater on their mortgages. Hopefully, these borrowers will be able to tap into their equity to refinance their debt, or be able to leverage it to sell their property and get a fresh start.”
