Is strong equity growth too good to last?

While the pandemic wreaked havoc on many parts of the economy, it has been a boon for homeowners. Some prime local examples can be found in ATTOM Data Solutions Q3 Home Equity & Underwater Report.


Homeowners with outstanding mortgages in Greeneville’s 37743 zip code have reason to wear a big grin. The number of equity-rich properties there almost doubled since last year. The current share is 42.2%, up from 23.2% last year. The only other local zip code with a higher share than the U.S. average was 37663 in Kingsport. Its share was 40.2%, up from 29.3% last year. The current U.S. share is 39.5%. ATTOM defines equity rich as a mortgaged property with a loan to value ratio of 50%, meaning the owner had at least 50% equity.

The rest of the region’s 22 zip codes included in the analysis ranged from 38.8% in Bluff City to 24210 in Abingdon.
Area-wide there were 79,423 outstanding mortgages in the Tri-Cities and Greeneville region. Of that, 28,473 (35.8%) are in the equity-rich class.


Many economically stressed property owners also benefited from the market’s record-level growth during the past year and a half.
For example, last year 14.5% percent of the properties in Rogersville’s 37,857 zip code were seriously underwater. They had a loan to value ratio of 125% or above. That means they owed at least 25% more on their mortgage than the property’s estimated value. But in an example of a rising market lifting all boats, the share of seriously underwater properties dropped to 4.9% this year.

Kingsport’s 37663 zip code has the lowest percentage of seriously underwater mortgages. It’s1/7%. Last year it was 5.4%.
Of course, not all of the shifting shares of equity-rich and seriously underwater properties are a direct result of increasing equity due to the sales and purchase churn. Still, it’s representative of the effects of last year’s equity gains.


Improvements at both ends of the equity scale in ATTOM’s current analysis represent some of the largest quarterly gains in two years. It’s yet another sign of how strong the U.S. and local housing markets remained in the third quarter, even as the broader economy only gradually recovered from damage inflicted pandemic.

“Homeowners across most of the United States could sit back with a smile yet again in the third quarter and watch their balance sheets grow as soaring home prices pushed their equity levels ever higher. Amid the best gains in two years, nearly four of every 10 owners found themselves in the equity-rich territory,” said Todd Teta, chief product officer with ATTOM. “For sure, some uncertainty lies ahead as other key market barometers have been a bit shaky as of late. And the Coronavirus pandemic remains a threat. But there is doubt that homeowners continue benefitting big-time from the relentless home price increases we are seeing around the country.”


Categories: REAL ESTATE