Tri-Cities properties with mortgages have fallen behind the national equity rich benchmark for the first time since the recession. At the same time, all 10 local markets in the Attom Data Solution’s Equity & Underwater Report had a higher share of properties that were seriously underwater.

Attom’s report shows 8.8% of mortgaged U.S. properties were seriously underwater at the end of Q3. Seriously underwater is defined as a property with loans at least 25% higher than the property’s estimated value.

Local underwater properties spiked in Q2 this year at 17,096 properties. Three months later it had dropped to 16,691. Both quarters were the highest in five years. The lowest local number in Attom’s current report was Q4 2013 – 7,884 properties.

CoreLogic’s Loan Performance report shows the most current 30-day or more delinquency rate in the Kingsport-Bristol metro area was 4.8% compared to 0.4% last year. It was 4.5% in the Johnson City MSA, up from 0.3%.

The delinquency rate and share of underwater properties don’t necessarily point to a big increase in foreclosures since some of those homeowners will resolve their issue. Attom’s Q3 foreclosure report listed 213 new foreclosure filings in the Tri-Cities area counties compared to 195 last year. That’s lower than spikes reported earlier in the year. And while the region’s foreclosure rate is running a little north of the normal, but under one percent. Still, the increase of underwater properties is an economic stress red flag for both the local economy and housing market.

Locally there were 16,691 mortgaged properties that were seriously underwater. During the same period last year, the number was 10,206. The two SW VA counties in the Tri-Cities region were the exception to NE Tenn.’s uptrend. Their share of underwater properties decreased.

Here’s how that underwater share of properties looked in the Q3 report compared to Q3 last year.

Carter Co. – 18.9%, 10.3%

Hawkins Co. – 19.8%, 11%

Johnson Co. – 28.1%, 20.2%

Sullivan Co. – 12/5%, 8.4%

Unicoi Co. – 13.1%, 9.4%

Washington Co. TN – 15.9%, 9%

Greene Co. – 20.9%, 12.9%

Bristol VA – 19%, 17.1%

Scott Co. – 20.6%, 27.7%.

Washington Co. VA – 18%, 23.8%

Last year all the NE Tenn. counties in the report had a share of equity-rich properties in the mid and upper 20% range. This year only three of those seven counties had more than 20%. The only jurisdiction that improved its equity rich share was Bristol, VA.

Equity-rich properties are defined as those where the property was 50% or less of the estimated market value.

There were 19,583 equity-rich properties at the end of Q3 compared to 23,699 last year.

“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity-rich homeowners while markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”

There are several reasons for the drop in local equity-rich properties. Some owners tapped their equity for a new home. The region has seen record single-family resales for 38 of the past 47 months. Other owners tapped their equity with Home Equity Lines of Equity.

Attom’s most recent loan origination report shows a big increase in the number of HELOC originations in the Kingsport-Bristol MSA beginning late last year. The much smaller spike in the number of HELOCs can be seen in the Johnson City MSA.

Here’s the share of equity-rich mortgaged properties in Q3 compared to Q3 2017.

Carter Co. 19.2%, 28.2%

Hawkins Co. – 18.7%, 26.4%

Johnson Co. – 23.3%, 29.7%

Sullivan Co. – 23.3%, 28.3%

Unicoi Co. – 24.5%, 25.7%

Washington Co. TN – 17.2%, 24.4%

Greene Co. – 19.2%, 28.2%

Bristol VA – 11.6%, 15.2%

Scott Co. – 22%, 18.7%

Washington Co. VA – 18.3%, 19.3%

Report methodology

Attom’s U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and amount of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data for more than 155 million U.S. properties.

Categories: CORE DATA, REAL ESTATE