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Homeowner Equity Keeps Growing Across U.S. In 3Q

Sarah Wolak
Nov 02, 2022
It may seem that the nation’s most expensive housing markets are off-limits to aspiring homeowners that require assistance with their downpayments

Nearly 50% of mortgaged residential properties in the nation are equity-rich.

KEY TAKEAWAYS
  • Just 2.9% of mortgaged homes, or one in 35, were considered seriously underwater in the third quarter of 2022.
  • At least half of all mortgage payers in 20 states were equity-rich in the third quarter, compared to only seven states year over year.

Small equity gains in the third quarter mean that 48.5% of mortgaged residential properties in the nation are equity-rich. In other words, the combined estimated amount of loan balances secured by those properties was no more than 50% of the home’s estimated market value.

That’s according to ATTOM’s U.S. Home Equity & Underwater Report. The third quarter numbers are up from 48.1% in the second quarter of 2022 and from 39.5% compared to the third quarter of 2021. 

While the latest increase fell below other gains in recent years, it still marked the 10th straight quarterly rise and resulted in nearly half of all mortgage payers landing in equity-rich territory. 

The report also found that at least half of all mortgage payers in 20 states were equity-rich in the third quarter, compared to only seven states year over year.
 
“Even though home price appreciation has slowed down dramatically in recent months, homeowners have continued to build equity,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “And it appears that many of those homeowners have decided to stay where they are rather than purchase a new home, and are beginning to tap into that equity, as the number of home equity lines of credit (HELOCs) issued in the second quarter of 2022 rose by 43% from the prior year.”

The report also shows that just 2.9% of mortgaged homes, or one in 35, were considered seriously underwater in the third quarter of 2022, with a combined estimated balance of loans secured by the property of at least 25% more than the property’s estimated market value. That’s down from 3.4%, or one in 29 properties, in the third quarter of 2021.

ATTOM reported that 94.3% of homeowners paying off mortgages had at least some equity built up in the third quarter of this year, compared to 92.9% a year earlier and 87.7% in the third quarter of 2020.   

Across the country, 39 states saw equity-rich levels increase from the second quarter of 2022 to the third quarter of 2022, while seriously underwater percentages dipped in 38 states. Year over year, equity-rich levels rose in all 50 states.

Nine of the 10 states where the equity-rich share of mortgaged homes increased most from the second quarter of 2022 to the third quarter of 2022 were in the Midwest, Northeast and South regions of the U.S. South Dakota was at the top of the list, in which the portion of mortgaged homes considered equity-rich rose from 36.7% in the second quarter to 41.8% in the third quarter.

On the flip side, the top five states where the equity-rich share of mortgaged homes decreased the most from the second quarter to the third quarter of this year were all in the West, led by Idaho, which was down from 69.5% to 65.8%.

More insights from the report can be found here

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