More homeowners leverage equity, underwater mortgages hit 4-year high

One of the final reports for 2017’s housing market shows that local homeowners who were best positioned increasingly leveraging their equity. At the same time, the number of seriously underwater mortgages signaled the highest Q4 mortgage stress levels in four years.

At the end of Q4, there were 23,483 equity-rich properties in the Tri-Cities region, down from 28,117 in Q4 2016. On the other end of the spectrum, there were 10,507 seriously underwater properties, up from 8,773 last year.

Both items are part of Attom Data Solutions’ 2017 Year-End Home Equity and Underwater Analysis.

The number of properties classified as equity rich – they have a loan to value of 50% or less – declined in every jurisdiction in the Tri-Cities region with the exception of Johnson and Washington Co. VA.

Nationwide the share was 25.4%, up from 24.6% a year ago. That was the smallest year-over-year increase since Q3 2015, according to Attom.

Even though there was a lot of leveraging that drove the share of local equity-rich properties lower, every local jurisdiction except Bristol VA had a higher share than the national share last year.

Share of equity-rich mortgaged properties.

The largest year-over-year decline was 7% in Sullivan Co. While the report doesn’t show is what homeowners were leveraging their equity for it’s a safe assumption many were buying new homes – trading up or scaling down for retirement. Sullivan has consistently had some of the highest equity rich proportions of mortgaged property in NE Tennessee. The highest was 38% in Q1 2014. Compared to Q4 that was a 10% decline, or 931 properties.

Share of mortgaged properties that are seriously underwater.

Johnson County’s share of equity-rich properties is one of the most consistent in the region. It has dropped below 30% twice since 2014 and peaked at 36% in Q1 2017. Its Q4 year-over-year decline was second only to Sullivan.

Hawkins and Unicoi counties were the only examples of the share of equity-rich properties showing a year-over-year increase.

Attom’s report says 9.3% of U.S. properties with a mortgage were seriously underwater at the end of Q4. Seriously underwater is defined as a property for a loan-to-value of 125% or more. Attom says it was the smallest year-over-year decrease since it began tracking in Q1 2012.

Here in the Tri-Cities, the share of underwater mortgaged properties increased in every jurisdiction. The largest increase came in Johnson Co. Its share of underwater properties is the highest in four years.

Sullivan Co. had the next biggest increase. Its Q4 share was also the highest in four years.

The actual number of seriously underwater properties in the region has been steadily increasing for the past four years. At the end of Q4 2014, it was 8,233 properties compared with 10,507 Q4 last year. It’s not a huge factor in the larger housing economy, but it does signal some signs of increasing economic stress among property owners.




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