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- Home equity up, homes underwater down in every state vs. 2Q of last year.
- Surge in home prices has widened gap between what homeowners owe on their mortgages and the value of their homes.
- The improvements in equity are the largest in 2 years.
Home equity surged nationwide in the second quarter of 2021, with more than a third of mortgaged residential properties in the United States considered equity rich, according to a new report.
The 2021 U.S. Home Equity & Underwater Report, produced by ATTOM, the real estate and property data provider, showed that 34.4% of mortgage residential properties in the U.S. were considered equity rich in the quarter, up from 31.2% in the first quarter of 2021 and from 27.5% in the second quarter of last year.
A mortgage residential property is considered equity rich if the estimated amount of loans secured by the property is no more than 50% of its estimated market value.
"The huge home-price jumps over the past year that helped millions of sellers earn big profits also kicked in big-time during the second quarter for other owners who saw their typical equity improve more than at any time in the last two year,” said Todd Teta, ATTOM's chief product officer. “Instead of the virus pandemic harming homeowners, it's helped create conditions that have boosted the balance sheets of households all across the country."
The report also shows that just 4.1% of mortgaged homes, or one in every 24, were considered severely underwater in the second quarter of 2021. A home is considered underwater when the combined estimated balance of loans secured by the property is at least 25% more than its estimated market value.
In 48 states, equity-rich levels increased and seriously underwater percentages fell from the first quarter to the second quarter 2021. Every state saw equity levels rise and the seriously underwater portion drop compared to the second quarter of 2020.
The improvements at both ends of the equity scale were the largest in two years and provided yet another sign that the housing market has resisted damage to the broader economy brought on by the pandemic that hit early last year. As the economy has gradually recovered in 2021, the housing market boom has continued for a 10th straight year, with gains across most measures.
Median home prices rose 11% nationwide in the second quarter this year, and 22% year-over-year. In major metro markets, median values rose 15% around the country. The price increases helped to boost equity, because it has widened the gap between what homeowners owe on their mortgages and the value of their properties.
To read the full report, click here.