Some Tri-Cities homeowners cash in on home equity, seriously underwater mortgages increase


By DON FENLEY

The number of homeowners in an equity-rich position has declined in most Tri-Cities counties. At the same time, the number of seriously underwater mortgages increased. That’s the broad sweep from RealtyTrac’s Q1 Equity and Underwater Report.

Q1 ER

A green field is used for counties with a higher percentage of equity rich homes than the national proportion of 19.8. State benchmarks: Tennessee 18.8%. Virginia 16.9%.

Compared to a national benchmark, four local county markets had a higher percentage of seriously underwater homes than the national proportion while all but two of nine counties had a higher percentage of homes that were equity rich.

RealtyTrac defines seriously underwater as mortgages with a loan to value ratio of 125% or above, meaning the homeowner owed at least 25% more than the estimated market value of the property.  Equity rich is defined as a loan to value ratio of 50% or lower, meaning the homeowner had at least 50% equity.

A1 SU

A red field is used to mark counties with a percentage of seriously underwater homes than the national proportion o f 13.2%. State benchmarks: Tennessee 10.8%. Virginia 8.1%.

The nationwide situation according to RealtyTrac’s analysis is, “at the end of the first quarter of 2015 there were 7,341,922 U.S. residential properties seriously underwater representing 13.2% of all properties with a mortgage. The share of seriously underwater homeowners increased 0.4 points from Q4 2014 — the first quarterly increase since the second quarter of 20120 — but still down more than 4 percentage points from a year ago.

“At the end of 2014 we saw the lowest share of seriously underwater properties since we began tracking such data, but in the first quarter that share bumped up slightly as home price appreciation continued to slow down in many markets,” said Daren Blomquist, vice president at RealtyTrac. “In addition, the data indicates more owners who have regained equity listed and sold their homes in the first quarter, cashing out on some of the home equity on the table in the U.S. housing market. The biggest change in the equity landscape nationwide was in the category of homeowners with between 20 and 50 percent equity, which saw a net decrease of nearly half a million between the end of the fourth quarter and the end of the first quarter.”

Locally, the year-to-year percentage of seriously underwater mortgages in Q1 increased in all county markets with the exception of Unicoi, Washington Co. VA and Bristol, VA.  The percentage in Washington Co. TN was unchanged.

County markets with the highest percentage of seriously underwater mortgages during the first three months of this year were Washington Co. VA. Followed by Bristol VA.

Here’s a capsule of seriously underwater homes by county for the first quarter of this year.

CARTER Co.

  • 852 homes – 11.4%.

GREENE Co.

  • 1,919 homes – 14.5%.

HAWKINS Co.

  • 1,136 homes – 10.9%.

JOHNSON Co.

  • 206 homes – 13.9%.

SULLIVAN Co.

  • 1,791 – 5.8%.

UNICOI Co.

  • 333 homes – 10.6%.

WASHINGTON Co. TN

  • 2,773 home – 9.4%.

BRISTOL, VA.

  • 226 homes – 16.2%.

WASHINGTON Co. VA

  • 958 – 26.1%.

The analysis also shows that all but two local counties in the study had a higher percentage of equity rich homes than the national and state benchmarks.

There are several reasons for the quarterly and year-to-year decline in homes with a high equity position. Some homeowners used that position to buy another home while others cashed in some equity for upgrades, renovations or other purposes.

Counties where the equity position declined from Q4 and that aligned with counties that had a Q1 increase of existing home sales were: Greene, Hawkins, Unicoi counties in Tennessee and Bristol VA and Washington County VA.

Sullivan County has the highest percentage of equity rich homes in the Tri-Cities during the first quarter of this year and has had that ranking for the five consecutive quarters.

Here’s a capsule of equity rich homes by county for the first quarter of this year.

CARTER Co.

  • 2,018 homes – 26.8%.

GREENE Co.

  • 3,375 – 25.4%.

HAWKINS Co.

  • 2,697 – 25.6%.

JOHNSON Co.

  • 431 homes – 29%.

SULLIVAN Co.

  • 10,670 homes – 34.7%.

UNICOI Co.

  • 757 homes – 34.1%.

WASHINGTON Co. TN.

  • 6,517 homes – 22%.

BRISTOL, VA

  • 246 homes – 17.7%.

WASHINGTON Co. VA

  • 648 homes – 17.9%.

The Q1 analysis also showed the following situation on the national level”

Seriously underwater by Property Type

When breaking out loans by property type, single family homes were at 11.9% seriously underwater, while condos came in at 16.6% and multi-family homes with 21.8% of properties seriously underwater.

Seriously underwater by loan vintage

The percentage of loans seriously underwater were higher for loans originated during the housing bubble years of 2004 to 2008, with 38% of all loans originated in 2006 seriously underwater — the most of any loan vintage, followed by 2007 (33%), 2005 (30%), 2008 (23%), and 2004 (21%).

Higher share of owner-occupied properties underwater than non-owner occupied

Among properties that were owner-occupied, 20.7% were seriously underwater, while 11% of non-owner occupied homes were seriously underwater.

Report methodology

The RealtyTrac U.S. Home Equity and Underwater report provides counts of residential properties based on several categories of equity — or loan to value (LTV) — at the state, metro and county level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data.

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