Home Equity Rises in Q4

February 4, 2021 9:14 pm

Equity-rich properties now outnumber those seriously underwater by a six-to-one ratio (ATTOM Data Solutions)

  • Equity-rich properties represent 30.2% of the 59 million mortgaged homes in the United States. This was up from 26.7% in the fourth quarter of 2019.
  • Seriously underwater properties dropped to 5.5% of the 59 million mortgaged homes in the United States. This was down from 6.4% in the fourth quarter of 2019.

Not every state has benefited from equity gains, but most have.

  • TOP 5: California saw equity rich homes jump to 46.1% in the fourth quarter up from 39.7% in Q3, Arizona was up 2.9 points to 32.3%, Montana increased 2.9 points to 34.8%, Idaho jumped up 2.8 points to 42.7%, and Vermont increased 2.7 points to 47.8%.
  • NUMBER ONE: 71.2% of homes in San Mateo County, CA are equity-rich

The states with the biggest declines in underwater properties were all in The South

  • TOP 5: West Virginia lead the way with shares of homes seriously underwater down to 11.4% from 13.8%, California was down to 2.4% from 3.7%, Mississippi dropped to 11.4% from 12.6%, Arkansas declined a full point to 10.7% and New Jersey was also down a point to 5.7%.
  • Not out of the wood yet. Of the top 5 states with the highest shares of mortgages that were still seriously underwater Louisiana led the way at 14.9%, Mississippi and West Virginia were both at 11.4%, Iowa was fourth at 11.3% and Arkansas was at 10.7%.

Rick Sharga, executive vice president of RealtyTrac, said in a statement, “The good news is that fewer and fewer homeowners across the country are underwater on their loans, But for those homeowners who are, the uncertainty of the economy during the pandemic looms large. The dual-trigger effect of losing a job and being underwater on a mortgage often unfortunately leads to a foreclosure.”

WHY THIS MATTERS: As home equity rises, a foreclosure crisis gets more remote.  In 2008, homeowners had such little equity they couldn’t afford to pay agent fees and closing costs so they often ended up in foreclosure.  Currently, a borrower who finds themselves in a shaky financial situation can choose to sell their house and might even make a healthy profit.  Lower the rate of foreclosures and you lower the possibility of a destabilized housing market.