More than 5.2 million U.S. properties were seriously underwater at the end of the first quarter, according to a report from ATTOM Data Solutions.
ATTOM’s Q1 2019 U.S. Home Equity & Underwater Report found the seriously underwater properties at the end of first quarter represented 9.1 percent of all U.S. properties with a mortgage, up from 8.8 percent in the previous quarter but down from 9.5 percent one year ago.
ATTOM defines seriously underwater properties as those where the combined balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value.
“With home prices increasing at a slower pace in 2018 than in previous years, the potential for people to climb out from mortgages that are underwater or advance into equity-rich territory tends to be reduced,” ATTOM Chief Product Officer Todd Teta said in a release. “However, only one in 11 mortgages are seriously underwater today, compared to nearly one in three during the depths of the recession.”
“Although, if the latest trend continues, it will raise another clear signal of a market slowdown, which will be good for buyers, but not so good for sellers,” Teta said. “But if the pattern of the past few years takes hold – with levels of underwater and equity rich mortgages turning around - it will mean the market remains strong for sellers, with fewer needing to get out from under financial distress.”
According to the report, the states with the highest share of seriously underwater properties were Louisiana (20.7 percent); Mississippi (17.1 percent); Arkansas (16.3 percent); West Virginia (16.2 percent); and Illinois (16.2 percent).
The metropolitan statistical areas with the highest share of seriously underwater properties were Baton Rouge, La. (21.3 percent); Scranton, Pa. (20.0 percent); Youngstown, Ohio (19.2 percent); Toledo, Ohio (19.2 percent); and New Orleans (17.8 percent).
The states with the highest share of equity rich properties were California (43 percent); Hawaii (38.1 percent); New York (34.2 percent); Washington (33.2 percent); and Vermont (32.8 percent), the report found.
The metropolitan statistical areas with the highest share of equity rich properties were San Jose, Calif. (68.3 percent); San Francisco (58.4 percent); Los Angeles (48.1 percent); Santa Rosa, Calif. (47.6 percent); and San Diego (39.3 percent).