HOME EQUITY TICKS DOWNWARD AGAIN ACROSS U.S. AS HOUSING MARKET REMAINS STALLED

 Equity Remains Historically High in First Quarter of 2023;
But Equity-Rich Portion of Mortgaged Homes Dips for Second Straight Quarter as Home Prices Drop Around Most of U.S.;
Seriously Underwater Level of Mortgages Virtually Unchanged

IRVINE, Calif., May 4, 2023 /PRNewswire/ -- ATTOM, a leading curator of land, property, and real estate data, today released its first-quarter 2023 U.S. Home Equity & Underwater Report, which shows that 47.2 percent of mortgaged residential properties in the United States were considered equity-rich in the first quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.

The portion of mortgaged homes that was equity-rich in the first quarter of 2023 decreased slightly from 48 percent in the fourth quarter of 2022. While that remained close to twice the level of just three years ago, the drop-off in the first three months of 2023 marked the second straight quarterly decline following 10 consecutive gains. The report found that the portion of equity-rich mortgage-payers went down from the fourth quarter of 2022 to the first quarter of 2023 in 32 states around the U.S.

The equity downturn, small as it was, stood as the latest indicator of how a decline in home prices across much of the country has started to affect homeowners following a decade-long market boom. It comes as home-seller profits have slid to their lowest point in two years.

Despite the emerging trend in equity-rich mortgages, the report also shows that just 3 percent of mortgaged homes, or one in 33, were considered seriously underwater in the first quarter of 2023. That meant that they had a combined estimated balance of loans secured by the property of at least 25 percent more than the property's estimated market value. The latest seriously underwater figure was virtually unchanged from 2.9 percent in the prior quarter, and was still down from 3.2 percent in the first quarter of 2022.

"Homeowners across the U.S. continue to sit in a far better position than they were just a few years ago, with historically elevated levels of wealth built up in their properties. However, the recent downturn in the housing market is chipping away at the bounty they reaped from a decade of price surges," said Rob Barber, chief executive officer for ATTOM. "Home equity has fallen modestly amid a larger slump in profits homeowners are getting when they sell. It's still too early to call this a long-term trend, and there are reasons to hope for a market turnaround this year. For now, though, various measures suggest that the best of the boom may be behind us."

Largest declines in equity-rich share of mortgages spread across West 
The portion of equity-rich mortgages continued to decrease in a majority of states around the U.S. from the fourth of 2022 to the first quarter of 2023, commonly by less than two percentage points. The biggest drops again came in the West, which followed a pattern that began late last year. The first-quarter declines were led by Arizona (portion of mortgages homes considered equity-rich decreased from 59.9 percent in the fourth quarter of 2022 to 56.4 percent in the first quarter of 2023), Nevada (down from 52.3 percent to 49 percent), Idaho (down from 61.6 percent to 58.5 percent), Utah (down from 60.3 percent to 58.1 percent) and Washington (down from 58.5 percent to 56.5 percent).

At the other end of the spectrum, the South had four of the five states where the equity-rich share of mortgaged homes increased the most from the fourth quarter of last year to the first quarter of this year. The largest increases were in New Mexico (up from 45.6 percent to 48.9 percent), Kentucky (up from 37.2 percent to 40.2 percent), Mississippi (up from 33.2 percent to 35 percent), Oklahoma (up from 35.2 percent to 36.4 percent) and South Carolina (up from 48.9 percent to 49.7 percent).

Largest increases in seriously underwater mortgages concentrated in Northeast 
The portion of mortgaged homes considered seriously underwater remained largely unchanged – and historically low – during the first quarter of 2023 in most of the nation, with the biggest increases clustered in the Northeast. States leading those increases included South Dakota (share of mortgaged homes that were seriously underwater up from 4.3 percent in the fourth quarter of 2022 to 4.8 percent in the first quarter of 2023), Pennsylvania (up from 4.4 percent to 4.7 percent), Maine (up from 2.2 percent to 2.5 percent), Vermont (up from 0.9 percent to 1.1 percent) and Idaho (up from 2.2 percent to 2.4 percent).

States where the percentage of seriously underwater homes decreased the most from the fourth quarter of 2022 to the first quarter of this year were led by Mississippi (down from 6.8 percent to 5.6 percent), Missouri (down from 7.1 percent to 6.4 percent), Kansas (down from 4.3 percent to 3.7 percent), Louisiana (down from 10.6 percent to 10.4 percent) and New Mexico (down from 3 percent to 2.9 percent).

West region continues to benefit from highest levels of equity-rich homeowners 
Despite seeing some of the largest decreases in equity-rich percentages, the West still had highest levels of such properties around the U.S. in the first quarter of 2023, with seven of the top 10 states. Those with the highest portions were Vermont (75.9 percent of mortgaged homes were equity-rich), Florida (61 percent), California (59.7 percent), Idaho (58.5 percent) and Montana (58.4 percent).

Nine of the 10 states with the lowest percentages of equity-rich properties in the first quarter of 2023 were in the Midwest and South. The smallest portions were in Louisiana (24.1 percent of mortgaged homes were equity-rich), Illinois (26.4 percent), Alaska (27.4 percent), West Virginia (29.9 percent) and North Dakota (30.9 percent).

Among 107 metropolitan statistical areas around the nation with a population of at least 500,000, the West and South continued to dominate the list of places with the highest portion of mortgaged properties that were equity-rich. All but one of the top 25 were in those regions during the first quarter of 2023, led by San Jose, CA (71.6 percent equity-rich); Sarasota-Bradenton, FL (68.1 percent); Los Angeles, CA (65.4 percent); Miami, FL (65.3 percent) and San Diego, CA (64.8 percent). The leader in the Northeast region again was Portland, ME (59.7 percent) while the top metro in the Midwest continued to be Grand Rapids, MI (49.9 percent).

The 10 metro areas with the lowest percentages of equity-rich properties in the first quarter of 2023 were in the Midwest and South. The smallest levels were in Baton Rouge, LA (21.1 percent of mortgage homes were equity-rich); Jackson, MS (27.5 percent); Chicago, IL (28.2 percent); Virginia Beach, VA (28.5 percent) and Little Rock, AR (29.1 percent).

The portion of mortgaged homes considered equity rich went down from the fourth quarter of 2022 to the first quarter of 2023 in 82 of the 107 metro areas with sufficient data (77 percent) and was down during the most recent two quarters in 64 percent. However, the portion remained up annually in 78 percent of those markets.  

Top equity-rich counties in Northeast and West 
Among 1,630 counties that had at least 2,500 homes with mortgages in the first quarter of 2023, 20 of the top 25 equity-rich locations were in the Northeast and West regions.

Counties with the highest share of equity-rich properties were Chittenden County (Burlington), VT (86.6 percent equity-rich); Dukes County (Martha's Vineyard), MA (83.1 percent); Nantucket County, MA (79.1 percent); Addison County (Middlebury), VT (77.3 percent) and San Miguel County (Telluride), CO (77.1 percent).

Counties with populations of at least 500,000 and the highest equity-rich rates included San Mateo County, CA (outside San Francisco) (73.8 percent equity-rich); Santa Clara County (San Jose), CA (72.5 percent); Pinellas County (Clearwater), FL (70.5 percent); Orange County, CA (outside Los Angeles (68.6 percent) and Palm Beach County (West Palm Beach), FL (68.3 percent).

Counties with the smallest share of equity-rich homes in the first quarter of 2023 were Vernon Parish, LA (northwest of Lafayette) (10.5 percent equity-rich); Greenup County, KY (east of Lexington) (11.8 percent); Iberville Parish, LA (outside Baton Rouge) (12.4 percent); Beauregard Parish, LA (east of Lafayette) (12.5 percent) and Geary County (Junction City), KS (14 percent equity-rich).

Counties with populations of at least 500,000 and the smallest equity-rich portions were concentrated in and around Chicago, IL. They were led by Lake County, IL (outside Chicago) (25.6 percent); Cook County (Chicago), IL (26.3 percent); Baltimore County, MD (26.5 percent); Du Page County, IL (outside Chicago) (27.8 percent) and Kane County, IL (outside Chicago) (28.1 percent).

At least half of all mortgaged properties considered equity-rich in more than 40 percent of zip codes 
Among 8,743 U.S. zip codes that had at least 2,000 residential properties with mortgages in the first quarter of 2023, there were 3,720 (43 percent) where at least half the mortgaged properties were equity-rich.

The top 50 were all in California, Florida, Massachusetts, New York and Texas, with four of the top 10 in Collier County (Naples), FL. The top 50 zip codes were led by 02539 in Edgartown, MA (86.9 percent of mortgaged properties were equity-rich); 34102 in Naples, FL (86.3 percent); 11963 in Sag Harbor, NY (85.1 percent); 33477 in Jupiter, FL (84.8 percent) and 34108 in Naples, FL (84.8 percent).

Midwest and South continue to have largest shares of seriously underwater mortgages 
The Midwest and South again had the top 10 states with the highest shares of mortgages that were seriously underwater. The top five in the first quarter of 2023 were Louisiana (10.4 percent seriously underwater), Missouri (6.4 percent), Illinois (6.4 percent), Iowa (6.3 percent) and Kentucky (6.1 percent).

The smallest shares were in Vermont (1.1 percent seriously underwater), Rhode Island (1.1 percent), Florida (1.2 percent), New Hampshire (1.3 percent) and California (1.4 percent).

Among 107 metropolitan statistical areas with a population greater than 500,000, those with the largest shares of mortgages that were seriously underwater in the first quarter of 2023 were Baton Rouge, LA (10.6 percent); New Orleans, LA (8 percent); Syracuse, NY (6.9 percent); Scranton, PA (6.6 percent) and Toledo, OH (6.3 percent).

While most seriously underwater rates around the country changed by less than one percentage point from the fourth quarter of last year to the first quarter of this year, the portion increased in 79, or 74 percent, of the metro areas around the U.S. with enough data to analyze.

More than 25 percent of residential mortgages seriously underwater in just 20 zip codes 
Among 8,743 U.S. zip codes that had at least 2,000 homes with mortgages in the first quarter of 2023, there were only 20 zip codes where more than 25 percent of mortgaged properties were seriously underwater.

The top five zip codes with the largest shares of seriously underwater properties in the first quarter of 2023 were 65203 in Columbia, MO (68 percent of mortgaged homes were seriously underwater); 65202 in Columbia, MO (53.9 percent); 65201 in Columbia, MO (52.2 percent); 10570 in Pleasantville, NY (44.6 percent) and 10520 in Croton-on-Hudson, NY (42.6 percent).

Most homeowners facing foreclosure have at least some equity 
Only about 238,000 homeowners were facing possible foreclosure in the first quarter of 2023, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 219,000, or 92 percent, had at least some equity built up in their homes.

States where the largest portion of homeowners facing possible foreclosure had equity in their properties in the first quarter of 2023 included Utah (98 percent with equity), Nevada (96 percent), Texas (95 percent), Florida (95 percent) and North Carolina (95 percent). States with the lowest percentages included Louisiana (82 percent with equity), Maryland (87 percent), Iowa (87 percent), Virginia (88 percent) and Ohio (88 percent).

Report methodology
The ATTOM U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and amount of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data collected and licensed by ATTOM nationwide for more than 155 million U.S. properties. The ATTOM Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM found that markets where investors were more prominent, they would offset the loan to value ratio due to sales involving multiple properties with a single jumbo loan encompassing all of the properties. Therefore, going forward such activity is now excluded from the reports in order to provide traditional consumer home purchase and loan activity.

Definitions 
Seriously underwater: 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: Loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity. 

About ATTOM 
ATTOM provides premium property data to power products that improve transparency, innovation, efficiency, and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.

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SOURCE ATTOM