ATTOM's U.S. Home Equity & Underwater Report for Q2 2023 showed a major uplift in homeowner equity. In this period, 49% of mortgaged homes across the U.S. were deemed "equity rich," signifying loan balances at most half their estimated market value. This marked a rise from 47% in Q1 2023, the highest level observed in at least four years.
The significant increase in equity-rich homes occurred in 45 of the 50 states, tracking with the rebound of home prices across the country. This increase comes after two consecutive quarterly declines spurred by a temporary stagnation in the housing market that threatened a decade-long trend of price and equity growth.
Additionally, the report revealed a drop in the proportion of homes that were considered seriously underwater in Q2 2023, down to just 2.8%. This represents the lowest point since at least 2019, declining from 3% in the previous quarter to 2.9% in Q2 2022.
Rob Barber, CEO of ATTOM, commented, "The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put."
However, Barber also highlighted the uncertainty of the market, pointing out the recent uptick in mortgage rates and reminding homeowners that "lots of changing forces are at work affecting whether boom times are really back."
The Midwest region recorded the most significant increases in the equity-rich share of mortgages. Wisconsin led the pack with a rise from 41.6% in Q1 to 47.1% in Q2 2023. Michigan, South Dakota, Ohio, and New Jersey also posted considerable gains. Conversely, states in the South and West, namely Nevada, Louisiana, Arizona, Florida, and Utah, saw minor decreases.
The greatest improvements in reducing the percentage of seriously underwater homes also occurred in the Midwest, led by Missouri, Illinois, South Dakota, Kansas, and Ohio. However, a few states, including Indiana, Hawaii, Maine, Mississippi, and Utah, saw slight increases in the percentage of seriously underwater homes.
Vermont topped the list of states with the highest levels of equity-rich homeowners, followed by California, Montana, Florida, and Idaho. Meanwhile, Louisiana, Alaska, Illinois, West Virginia, and North Dakota had the lowest percentages of equity-rich properties.
With the busy home-buying season of 2023 still underway and the recent resurgence in home values, homeowners across the U.S. may look forward to a further boost in their balance sheets. However, ATTOM's report underscores the fact that this prospect will largely depend on the stability of key market indicators.
