ATTOM Data Solutions, has released its second-quarter 2020 U.S. Home Equity & Underwater Report, which shows that 15.2 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.
The count of equity-rich properties in the second quarter of 2020 represented 27.5 percent, or about one in four, of the 55.2 million mortgaged homes in the United States. That was up from the 26.5 percent level in the first quarter of 2020, despite the spreading economic fallout from the worldwide Coronavirus pandemic.
The report also shows that just 3.4 million, or one in 16, mortgaged homes in the second quarter of 2020 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. That figure represented 6.2 percent of all U.S. properties with a mortgage, down from 6.6 percent in the prior quarter.
Among the 50 states, 49 showed an increase in the percentage of homes considered equity-rich while just three showed an increase in the percentage that were seriously underwater.
The second-quarter home equity picture reflects a housing market that put out strong, but mixed signals, amid a nationwide economic slowdown aimed at battling the spread of a pandemic that began surging across the country in February and March of this year. Unemployment spiked and sales slumped from April through June, but single-family home equity remained strong as most housing markets saw prices rise on properties that did sell.
“Homeowners saw their equity rise far and wide throughout the United States during the second quarter of this year in yet another sign of the housing market punching back against the Coronavirus pandemic. More property owners rose into equity-rich territory and escaped the seriously underwater lane, putting more money into the average household,” said Todd Teta, chief product officer with ATTOM Data Solutions. “The housing market still faces enormous challenges, given that unemployment remains historically high and the broader economy contracted severely in the second quarter. If that continues, owner equity will be seriously threatened. But for now, homeowners are enjoying the gains when it comes to what, for most, is their most significant asset.”
Midwest and South show biggest improvements in equity-rich share of homes and largest declines in underwater properties
Seven of the 10 states with the biggest gains in the share of equity-rich homes from the first quarter to the second quarter of 2020 were in the South and Midwest. They were led by Georgia, where the level of homes considered equity-rich rose from 17.5 percent in the first quarter of 2020 to 20 percent in the second quarter, Idaho (up from 33.6 percent to 35.4 percent), Mississippi (up from 19.3 percent to 21 percent), Indiana (up from 23.5 percent to 25.2 percent) and Nebraska (up from 18.2 percent to 19.9 percent).
States with decreases or the smallest gains from the first to the second quarter of 2020 included Hawaii (down from 39 percent to 38.6 percent), Delaware (stayed the same at 17.9 percent), New Jersey (stayed the same at 23.7 percent), Illinois (up from 15.2 percent to 15.6 percent) and North Dakota (up from 20.8 percent to 21.3 percent).
Nine of the 10 states with the biggest declines from the first to the second quarter of 2020 in the percentage of homes considered seriously underwater also were in the Midwest and South. They were led by West Virginia, (share of homes seriously underwater down from 15.7 percent to 13.8 percent), Mississippi (down from 16.9 percent to 15 percent), Georgia (down from 9.9 percent to 8.4 percent), South Dakota (down from 12.4 percent to 11.1 percent) and Alabama (down from 11.3 percent to 10.2 percent).
States where the percentage of seriously underwater homes rose or stayed the same in the second quarter of 2020 from the previous quarter included Hawaii (up from 2.7 percent to 2.8 percent), Indiana (up from 7.7 percent to 7.8 percent), Colorado (stayed at 2.8 percent), Oregon (stayed at 2.5 percent) and Delaware (stayed at 9.3 percent).
Northeast and West continue to have largest shares of equity-rich homes
Despite the improvement in the Midwest and South, the top 10 states with the highest share of equity-rich properties in the second quarter of 2020 were all in the Northeast and West regions, led by California (43 percent of homes were equity rich), Vermont (39.1 percent), Hawaii (38.6 percent), Washington (38.1 percent) and Idaho (35.4 percent),
States with the lowest percentage of equity-rich properties in the second quarter of 2020 were Louisiana (14 percent equity-rich), Oklahoma (15.6 percent), Illinois (15.6 percent), Arkansas (16.9 percent) and Alabama (17.6 percent). Those were the same states with five lowest levels in the first quarter of 2020.
Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, nine of the 10 with the highest shares of equity-rich properties in the second quarter of 2020 were in the West, led by San Jose, CA (64 percent equity-rich); San Francisco, CA (56.5 percent); Los Angeles, CA (47.9 percent); Santa Rosa, CA (45.3 percent) and Seattle, WA (40.9 percent). The leader in the Northeast region again was Boston, MA, (35.9 percent), while Dallas, TX, again led the South (38.3 percent) and Grand Rapids, MI, continued to top the Midwest (28.8 percent).
Metro areas with the lowest percentage of equity-rich properties in the second quarter of 2020 were again Baton Rouge, LA (10.7 percent equity-rich); Columbia, SC (14 percent); Little Rock, AR (14 percent); Dayton, OH (15 percent) and Tulsa, OK (15.2 percent).
Among the 107 metro areas, 100 (93.5 percent) showed an increase in levels of equity-rich properties from the first to the second quarter of 2020; just seven (6.5 percent) showed a decrease.
Top equity-rich counties concentrated in West and Northeast
Among 1,492 counties that had at least 2,500 properties with mortgages in the second quarter of 2020, 21 of the top 25 equity-rich locations were in the West or Northeast regions. The highest concentration was in California.
Counties with the highest share of equity-rich properties were San Mateo County (outside San Francisco), CA (71.1 percent equity-rich); San Francisco County, CA (68.3 percent); Santa Clara County (San Jose), CA (64.9 percent); Dukes County (Martha’s Vineyard), MA (58.9 percent) and Alameda County (outside San Francisco), CA (56.3 percent).
Counties with the smallest share were Wayne County, IN (outside Indianapolis) (5.8 percent); Vernon Parish, LA (6 percent); Hoke County, NC (outside Fayetteville) (6.5 percent); Beauregard Parish, LA (outside Lake Charles) (7.2 percent) and Hampton City-County, VA (outside Newport News) (7.4 percent).
At least half of all properties were equity-rich in 482 zip codes
Among 8,334 U.S. zip codes that had at least 2,000 properties with mortgages in the second quarter of 2020, there were 482 where at least half of all properties with a mortgage were equity rich.
Twenty-four of the top 25 were in California, mostly in the San Francisco Bay area. They were led by zip codes 94116 in San Francisco (80.7 percent equity-rich), 94122 in San Francisco (80.3 percent), 94112 in San Francisco (78.9 percent), 94306 in Palo Alto, CA (77.1 percent) and 94040 in Mountain View (76.9 percent). The same zip codes were in the top five in the first quarter of 2020.
Highest seriously underwater shares remain in the South and Midwest
The top 10 states with the highest shares of mortgages that were seriously underwater in the second quarter of 2020 were all in the South and Midwest regions, led by Louisiana (16.4 percent seriously underwater), Mississippi (15 percent), Iowa (13.9 percent), West Virginia (13.8 percent) and Arkansas (12.4 percent).
Among 107 metropolitan statistical areas analyzed in the report with a population greater than 500,000, those with the highest share of mortgages that were seriously underwater in the second quarter of 2020 were Youngstown, OH (15.7 percent); Baton Rouge, LA (15.5 percent); Syracuse, NY (14.1 percent); Scranton, PA (14 percent) and Toledo, OH (12.8 percent).
Among the 107 metro areas, 18 (16.8 percent) showed an increase in levels of underwater properties from the first to the second quarter of 2020; 89 (83.2 percent) showed a decrease.
At least 25 percent of all properties were seriously underwater in 130 zip codes
Among 8,334 U.S. zip codes that had at least 2,000 properties with mortgages in the second quarter of 2020, there were 130 zip codes where at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in the Cleveland, OH; St. Louis, MO and Dayton, OH.
The top five zip codes with the highest share of seriously underwater properties were 47374 in Richmond, IN (76.3 percent seriously underwater); 95969 in Paradise, CA (69.6 percent); 08611 in Trenton, NJ (59.6 percent); 71446 in Leesville, LA (58 percent) and 53206 in Milwaukee, WI (58 percent).
The ATTOM Data Solutions 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 Data Solutions nationwide for more than 155 million U.S. properties. The ATTOM Data Solutions Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM Data Solutions 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.