Tri-Cities seriously underwater properties increase, equity rich properties decline

Equity-rich is a sweet spot for mortgage holders and there were almost 20,000 of them in the Tri-Cities during the last three months of 2018. And when combined with mortgaged properties that are seriously underwater it’s a snapshot of how the housing market is performing. During Q4 last year there a little more than 15,000 gasping for financial breath.

From a regional trends perspective, the separation between the two metrics is the closest they have been in five years. The share of equity-rich properties has declined while the number of those that are seriously underwater has increased.

Both indicators are part of Attom Data Solution’s Year-End Equity, Underwater Report. The analysis set the national benchmark for equity-rich properties at 25.6% and 8.8% for those that are seriously underwater. Equity-rich is defined as properties with a loan to value ratio of 50 percent or lower, meaning the owner had at least 50% equity. Seriously underwater is defined as a property with a loan to value ratio of 125 percent or above, meaning the owner owned at least 25 % more than the estimated market value of the property.

Only Johnson County can now claim a share of equity-rich properties greater than the national average. That’s a big departure from the equity status of in several local counties.

For example, Sullivan County used to consistently have the highest share of equity-rich properties in the Tri-Cities region. But that share has declined from 38% in early 2014 to 23.3% in Q4. Much of the decline can be seen in existing home resales and the uptick in remodeling trends. Sullivan County the hottest housing markets in the region last year. County single-family resales were up 28.5% last year while the average sales price increased 8.2%. The county’s market share of resales was higher than its 2017 annual share every month last year and much of that growth can be attributed to owners tapping their equity.

Here’s how the equity-rich situation looked in Q4 compared to each county’s high-point during the last five years.

Carter – 19.1%, down from 30%.

Greene – 19.7%, down from 29%.

Hawkins – 19.8%, down from 29%.

Johnson – 27%, down from 36%.

Sullivan – 23.3%, down from 38%.

Unicoi – 20.9%, down from 29%.

Washington TN – 18.3%, down from 25%.

Washington VA – 18.7%, down from 25.%.

The national average in Q4 was 25.6%

“With homeowners staying put longer, homeownership equity will most likely continue to strengthen. Those that are seriously underwater may find themselves coming up for air as they continue to pay off excessive legacy mortgages or sell,” said Todd Teta, chief product officer with ATTOM Data Solutions.

On average, American homeowners stay in a home eight-and-a-half years before selling.

The share of Tri-Cities mortgaged properties that were seriously under was in the double digits for the second straight quarter during the last here months of 2018 – five of the eight local counties included in Attom’s analysis had a rate better than twice the national 8.8% benchmark.

An increase in underwater properties combined with increased new foreclosure filings are stress signals for the local economy.

Here’s how the local counties underwater share looked in Q4 compared to its low point in the past five years.

Carter – 19.1%, up from 7%.

Greene – 20.5%, up from 10%.

Hawkins – 19.1%, up from 8%.

Johnson – 23.7%, up from 10%.

Sullivan – 12.7%, up from 5%.

Unicoi – 15.7%, up from 7%.

Washington TN – 14.3%, up from 8%.

Washington VA – 16.9%, which is the low point for this county since Q1 2013.