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High Home Prices Take Away, and Giveth

Home prices have been on the rise for years, and have reached pre-recession levels in…

  • March 1, 2019

Home prices have been on the rise for years, and have reached pre-recession levels in many markets. This has made it a challenge to buy an affordable home. At the same time, these high prices have made many existing homeowners rich.

Property database curator ATTOM Data Solutions, keeps track of these developments, and recently released its Year-End 2018 U.S. Home Equity & Underwater Report.

The report shows that, in the fourth quarter of 2018, over 14.5 million U.S. properties were equity rich, where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value, up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.

The 14.5 million equity rich properties in 4Q18 represented 25.6 percent of all properties with a mortgage, down slightly from 25.7 percent in the previous quarter but up from 25.4 percent in Q4 2017.

The report also shows more than 5 million U.S. properties were seriously underwater, where the combined estimated balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value, representing 8.8 percent of all U.S. properties with a mortgage.

That 8.8 percent share of seriously underwater homes remained unchanged from the previous quarter and down from 9.3 percent in Q4 2017.

“With homeowners staying put longer, home ownership equity will most likely continue to strengthen. Those that are seriously underwater may find themselves coming up for air as they continue to pay off excessive legacy mortgages or sell,” said Todd Teta, chief product officer with ATTOM Data Solutions. “This report helps to showcase a story of the West coast markets having the highest share of equity rich homeowners versus the South and Midwest markets, who continue to have stubbornly high rates of seriously underwater homeowners.”

Highest seriously underwater share in Louisiana, Mississippi, Arkansas, Illinois, Iowa

States with the highest share of mortgages that were seriously underwater included; Louisiana (20.8 percent); Mississippi (16.9 percent); Arkansas (15.9 percent); Illinois (15.6 percent); and Iowa (15.2 percent).

Among 98 metropolitan statistical areas analyzed in the report, those with the highest share of mortgages that were seriously underwater included; Baton Rouge, Louisiana (20.7 percent); Youngstown, Ohio (19.0 percent); New Orleans, Louisiana (19.0 percent); Toledo, Ohio (18.0 percent); and Scranton, Pennsylvania (17.7 percent).

27 zip codes where more than half of all properties are seriously underwater

Among 7,590 U.S. zip codes with at least 2,500 properties with mortgages, there were 27 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Chicago, Cleveland, Saint Louis, Atlantic City, Detroit and Virginia Beach metropolitan statistical areas.

The top five zip codes with the highest share of seriously underwater properties were 08611 in Trenton, New Jersey (70.3 percent seriously underwater); 63137 in Saint Louis, Missouri (64.8 percent); 60426 in Harvey, Illinois (62.3 percent); 38106 in Memphis, Tennessee (60.5 percent); and 61104 in Rockford, Illinois (59.6 percent).

“Seriously underwater” means a 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” means a loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity.

Find out more at www.attomdata.com.

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