About 17.8 million residential properties in the United States were considered equity-rich during 2020’s fourth quarter, according to a report by ATTOM Data Solutions.
The equity-rich properties in the fourth quarter of 2020 represented 30.2 percent, or about one in three, of the 59 million mortgaged homes in the United States, up from 28.3 percent in the third quarter of 2020, 27.5 percent in the second quarter and 26.7 percent in the fourth quarter of 2019, ATTOM found.
The report found 3.2 million, or one in 18, mortgaged homes in the fourth quarter of 2020 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. ATTOM said that figure represented 5.4 percent of all U.S. properties with a mortgage, down from 6 percent in the prior quarter, 6.2 percent in the second quarter of 2020 and 6.4 percent a year ago.
“When it came to homeowner equity in the United States, the fourth quarter was more of the same as the third, which was more of the same as the second: a scenario that has continued to improve,” ATTOM Chief Product Officer Todd Teta said in a release. “The housing market kept booming despite damage caused by the virus pandemic to the broader economy – a surge that continued to boost the equity that most property owners have in their homes.”
“As with many other housing-market metrics, the prospects for equity building even further in 2021 are wholly uncertain because of many questions surrounding the pandemic and the U.S. economy,” Teta added. “But for now, homeowners are sitting pretty on a growing reserve of personal wealth.”
According to the report, six of the 10 states with the biggest gains in the share of equity-rich homes from the third quarter to the fourth quarter of 2020 were in the West. The top five were California, where the portion of mortgaged homes considered equity-rich rose from 39.7 percent in the third quarter of 2020 to 46.1 percent in the fourth quarter; Idaho (up from 39.5 percent to 42.7 percent); Montana (up from 31.9 percent to 34.8 percent); Arizona (up from 29.4 percent to 32.3 percent); and Vermont (up from 45.1 percent to 47.8 percent).
States where the share of equity-rich homes decreased or went up by the smallest amounts from the third to the fourth quarters of 2020 were Nebraska (down from 23 percent to 22.4 percent); South Dakota (up from 30.3 percent to 30.4 percent); North Dakota (up from 24.7 percent to 24.8 percent); Massachusetts (up from 35.7 percent to 35.9 percent); and Iowa (up from 21.8 percent to 22.1 percent).
ATTOM said the states with the largest declines in underwater properties were West Virginia, (share of homes seriously underwater down from 13.8 percent to 11.4 percent); California (down from 3.7 percent to 2.4 percent); Mississippi (down from 12.6 percent to 11.4 percent); Arkansas (down from 11.7 percent to 10.7 percent); and New Jersey (down from 6.7 percent to 5.7 percent).
“The good news is that fewer and fewer homeowners across the country are underwater on their loans,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But for those homeowners who are, the uncertainty of the economy during the pandemic looms large. The dual-trigger effect of losing a job and being underwater on a mortgage often unfortunately leads to a foreclosure.”
ATTOM said the four states where the percentage of seriously underwater homes rose from the third quarter to the fourth quarter of 2020 were Connecticut (up from 7.7 percent to 8.2 percent); Nebraska (up from 6.9 percent to 7.3 percent); North Dakota (up from 8 percent to 8.1 percent); and Massachusetts (up from 3.8 percent to 3.9 percent).
The metropolitan statistical areas with the highest shares of equity-rich properties in the fourth quarter of 2020 again were San Jose, Calif. (65.7 percent equity-rich); San Francisco (57.5 percent); Los Angeles (51.7 percent); Santa Rosa, Calif. (45.1 percent); and San Diego (44.5 percent).
ATTOM said the metro areas with the lowest percentage of equity-rich properties in the fourth quarter of 2020 were Baton Rouge, La. (13.5 percent equity-rich); Columbia, S.C. (14.7 percent); Little Rock, Ark. (15.5 percent); Akron, Ohio (16.3 percent) and Tulsa, Okla. (17.3 percent).