Local homeowners equity up, underwater mortgages hit new lows

The pandemic fueled higher home prices have boosted the overall economic health of the local housing market. Higher home prices translated into hefty wealth gains for some local homeowners. At the same time, they tossed a lifeline to owners with underwater mortgages.

The percentage of equity-rich owners in half the local counties included in ATTOM Data Solutions’ Home Equity & Underwater Report were at all-time highs during the second quarter. ATTOM defines equity rich as a mortgaged property with a 50% or lower loan-to-value ratio.

On the other side of the ledger, the percentage of owners who owed more on the mortgage than the property’s estimated value hit all-time lows.  The lone exception was Sullivan County. Owners of seriously underwater mortgages owe at least 25% more than their property value.

There are 79,359 mortgaged properties in the six local counties included in the Q2 analysis. Those that are equity rich compared to their previous all-time high were:

Carter – 29.8%, down from 30% during Q4 2016.

Greene – 32.5%, up from 29% in the first and second quarters of 2016.

Hawkins – 29.7%, up from 27.4% in Q4 2017.

Sullivan – 32.6%, down from 38% during Q1 2014.

Unicoi – 27%, down from 29% during Q3 2016

Washington – 28.1%, up from 24.4% during Q3 2017.

The U.S. market share of equity-right properties was 34.4%.

All but one county set new lows for underwater mortgage share. Here’s what the current share compared to the highest looks like:

Carter – 6.9%, down from 19.1% during Q4 2018

Greene – 5.4%, down from 20.3% during Q1 2019.

Hawkins – 8.2%, down from 23.4% during Q1 2019.

Sullivan – 4.3%, down from 17.8% during Q1 2019.

Unicoi – 7.3%, up from 4.7% during Q1 this year.

Washington – 4.4% down from 14.7% during Q1 2019.

The U.S. market share for underwater properties was 4.1%

Second-quarter equity increases came as the local median home price rose 16.9% at mid-year.

Median values rose at least 15% annually in most metro-area markets around the country, according to ATTOM. Those ongoing price runups have boosted equity because the increases have widened the gap between what homeowners owe on their mortgages and the value of their properties.

Prices have continued rising as rock-bottom interest rates and a desire to escape virus-prone areas have led to migration by home buyers largely untainted by the pandemic’s financial damage. Those buyers have been chasing a declining supply of properties for sale throughout the past year, resulting in elevated demand and soaring values.

“The huge home-price jumps over the past year that helped millions of sellers earn big profits also kicked in big-time during the second quarter for other owners who saw their typical equity improve more than at any time in the last two years. Instead of the virus pandemic harming homeowners, it’s helped create conditions that have boosted the balance sheets of households across the country,” said Todd Teta, ATTOM’s chief product officer. “There are still a lot of questions hanging over the near future of the U.S. housing market, with some connected to how well the economy keeps recovering from the pandemic, and some not. We’ll keep watching those closely, though for now, there are few assets that keep on giving so much as homeownership.”

ATTOM calculates the equity/LTV from the 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 collected and licensed by ATTOM for more than 155 million U.S. properties. The ATTOM Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM found that markets where investors were more prominent, would offset the loan to value ratio due to sales involving multiple properties with a single jumbo loan encompassing all the properties. Therefore, going forward such activity is now excluded from the reports to provide traditional consumer home purchase and loan activity.

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