Tri-Cities homeowners rank high in Q1 home equity position comparison


When media reports turn to homeowner equity more often than not the focus is on the unfortunates who are seriously underwater. Those are the folks who owe at least 25 percent more than the estimated value of their property.

equity richIt’s one of the indicators used to monitor economic stress in a housing market. But there’s another equity story. One that gets more attention from those interested in the often understated stability – and the economic strength of that stability – of the housing market. I’m talking about homeowners who are equity rich. They have at last 50 percent equity in their home. The only stronger indicator is the share of homes without a mortgage, and Northeast Tennessee ranks high in that metric.

There are a couple of local counties where almost half of all homes have no mortgage, putting them way above the national average. Pinnacle developer Steve Johnson say that was one of the factors Bass Pro looked at before committing to locating in the Tri-Cities. They looked at it because no mortgage – and equity rich for that matter – represents a higher level of, and access to, disposable income.

CaptureTo get a little better handle on households that are equity rich here in Northeast Tennessee look at it this way. For every area homeowner with a seriously underwater mortgage during the first three months of this year, there were three who were equity rich. And the ratio gets bigger on the equity rich side in most local counties.

Nationwide the share of equity-rich homeowners is 22 percent.

Homeowners in all but two area housing markets improved their equity rich positions during the first quarter while the number of seriously underwater mortgages made small changes in three markets.

Those numbers come from RealtyTrac’s Home Equity & Underwater Report. That full report and state comparisons can be found at http://www.realtytrac.com/news/foreclosure-trends/q1-2016-u-s-home-equity-and-underwater-report/

Only two of the nine local markets in the report had a share of mortgages under the national average.  The others had a higher share – some, like Sullivan and Johnson counties, quite a bit higher.

Sullivan County surrendered to Johnson County as the market with the highest equity rich share in the region for the first time in seven quarters.

At the risk of overstating the obvious let’s go back to the share of homes without a mortgage plus equity-rich homeowners to emphasize the wealth issue. Since Sullivan County is one of the largest housing markets I’ll use it as an example. The latest Census data show 48.9 percent the homes are paid for. Of the remaining households, 32.4 percent are equity rich.

Remember that for every one seriously underwater to three equity rich households? In Sullivan County the ratio is one to a little more than five.

A deeper dive into the data can turn up some other gee-whiz factoids. For instance, the two regional areas with the higher per capita disposable income are Colonial Heights. Mount Carmel isn’t far behind, and they are both competitive with some of the outlying counties in the Nashville area where most of the growth in Tennessee is occurring.

The only markets with less share of equity rich property than the national average were Bristol, VA and Washington Co. VA. Those two markets also had a higher share of seriously underwater mortgages.

Report methodology

The RealtyTrac U.S. Home Equity & 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, and is also matched against record-level foreclosure data to determine foreclosure status for each equity/LTV category.

 

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