Property data curator ATTOM released its second-quarter 2023 U.S. Home Equity & Underwater Report, which shows 49 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.
The portion of mortgaged homes that were equity-rich in the second quarter of 2023 increased from 47 percent in the first quarter of 2023, to the highest point in at least four years.
With home prices rebounding across the U.S., the report found the level of equity-rich mortgage-payers went up from the first quarter of 2023 to the second quarter of 2023 in 45 of the nation’s 50 states.
The gains followed two straight quarterly drop-offs caused by a temporary slowdown in the housing market that had threatened to end a decade-long run of price and equity growth. The second-quarter upturn marked another sign of how the market shift has helped homeowners, as home-seller profits also spiked.
While equity-rich levels rose in the second quarter, the report also showed less than 3 percent of mortgaged homes, or one in 36, were considered seriously underwater in the second quarter of 2023. That meant they had a combined estimated balance of loans secured by the property of at least 25 percent more than the property’s estimated market value.
Just 2.8 percent of mortgaged homes were seriously underwater in the second quarter of this year, the lowest point since at least 2019. The latest figure was down from 3 percent in the prior quarter and 2.9 in the second quarter of 2022.
“The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put. Equity levels were high even during the recent downturn, and now they are going back up and better than ever,” Rob Barber, ATTOM CEO , said in a release. “It is well worth nothing that the market remains in flux and the recent improvement could easily be temporary. Lots of changing forces are at work affecting whether boom times are really back, especially amid a recent increase in mortgage rates. But with the 2023 peak buying season still underway, it seems that homeowners can reasonably expect their household balance sheets to grow a bit more in the near future.”
Equity for U.S. homeowners improved in the second quarter as prices for single-family homes and condos nationwide rose throughout most of the country, reversing a market slowdown that had run from the middle of last year to the early part of this year. Nationwide, the median home value shot up 10 percent in the second quarter to yet another all-time high of $350,000, after dropping 7 percent over the prior three quarters, according to ATTOM.
Home mortgage rates were down by one-half to three-quarters of a point for a 30-year fixed loan during the second quarter, after more than doubling in 2022 to about 7 percent. At the same time, consumer price inflation dipped down under 4 percent, the stock market improved after a year of ups and downs, and unemployment remained less than 4 percent. This happened as the peak annual buying season revved up during a time when the supply of homes for sales around the U.S. remained historically low.
With several months to go in the 2023 home-buying season, the potential for more gains remains in place. But that will depend heavily on whether key market drivers continue to improve or decline, ATTOM said.