Home Equity Takes a Hit

According to ATTOM Data’s first-quarter Home Equity & Underwater Report, 45.8% of mortgaged residential properties in the country were considered equity-rich, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. 

This number is down from 46.1% in the fourth quarter of 2023, marking the third straight quarterly decline. The latest figure also was down from 47.2 percent in the first quarter of 2023, hitting the lowest point in two years. 

However, the portion of mortgaged homes that were seriously underwater rose slightly during the first quarter—from 2.6% to 2.7%—of all residential mortgages. Seriously underwater mortgages are those with combined estimated balances of loans secured by properties that are at least 25 percent more than those properties’ estimated market values. 

“Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to help finance all kinds of things, from home renovations to business startups. Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated,” said Rob Barber, CEO for ATTOM. “It’s too early to make any broad statements about the market direction, especially coming off the typically slower Fall and Winter months. But amid the recent trends, this year’s Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing.” 

Equity-rich share of mortgages declines quarterly in a majority of U.S.

The number of mortgages that were equity-rich decreased in 26 states year-over-year, most commonly by less than two percentage points. Measured annually, equity-rich levels dropped from the first quarter of 2023 to the same period this year in 25 states. 

The biggest quarterly declines came in the South regions, led by Kentucky (portion of mortgages homes considered equity-rich decreased from 35.4% in the fourth quarter of 2023 to 28.7% in the first quarter of 2024), South Carolina (down from 42.4% to 40%), Georgia (down from 46% to 43.7%), Delaware (down from 39.4% to 37.2%) and Indiana (down from 43% to 40.9%). 

At the other end of the scale, equity-rich levels rose in 23 states from the fourth quarter of 2023 to the first quarter of 2024, mostly by less than one percentage point. The largest improvements were concentrated in the Midwest and West regions, led by South Dakota (up from 49.8% to 51.5%), Hawaii (up from 55% to 56.5%), Montana (up from 57.3% to 58.7%), North Dakota (up from 30.4% to 31.5%) and Mississippi (up from 37.3% to 38.3%). 

Seriously underwater mortgage levels tick upward in most states

The portion of mortgaged homes considered seriously underwater rose slightly nationwide from one in 38 during the fourth quarter of last year to one in 37 during the first quarter of this year. The ratio went up in 37 states, mostly by less than one percentage point. 

The biggest increases were clustered in the South, which already had some of the nation’s highest levels of seriously underwater mortgages. The largest quarterly increases were in Kentucky (share of mortgaged homes that were seriously underwater up from 6.3% in the fourth quarter of 2023 to 8.3% in the first quarter of 2024), West Virginia (up from 4.4% to 5.4%), Oklahoma (up from 5.5% to 6.1%), Arkansas (up from 5.2% to 5.7%) and Delaware (up from 2.3% to 2.7%). 

On the flip side, states where the percentage of seriously underwater homes decreased most from the fourth quarter of 2023 to the first quarter of 2024 were Missouri (down from 5.6% to 4.5%), Mississippi (down from 8% to 7.1%), Arizona (down from 1.9% to 1.6%), Hawaii (down from 1.7% to 1.6%) and Tennessee (down from 2.9% to 2.8%). 

Midwest and South have largest shares of seriously underwater mortgages

The Midwest and South regions had nine of the top 10 states with the highest shares of mortgages that were seriously underwater in the first quarter of this year. The top five were Louisiana (11.3% seriously underwater), Wyoming (8.8%), Kentucky (8.3%), Mississippi (7.1%) and Oklahoma (6.1%). 

The smallest shares were in Vermont (0.8% seriously underwater), Rhode Island (1.1%), New Hampshire (1.1%), California (1.2%) and Massachusetts (1.3%). 

Click here to see the report in its entirety. 

Share this post :

Picture of Kyle G. Horst

Kyle G. Horst

Kyle G. Horst is a reporter for MortgagePoint. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at kyle.horst@thefivestar.com.
Latest News

Unleash the Power of Knowledge

Stay in the know with our suite of email blasts
Receive the latest news

Gain Access to Exclusive Mortgage Knowledge!

Stay at the forefront of industry developments! By subscribing to MortgagePoint, you’re aligning yourself with the latest insights, updates and exclusive promotions in the mortgage industry. As an industry professional, it’s critical to stay informed and up-to-date. Don’t miss out – subscribe now!