Property data curator ATTOM released its third-quarter 2024 U.S. Home Equity & Underwater Report, revealing 48.3 percent of mortgaged residential properties were equity-rich. This indicates the combined loan balances secured by these properties were no more than half of their estimated market values.
This figure represented a decline from the peak of 49.2 percent in the second quarter of 2024 but remained higher than 47.4 percent from the same period in 2023, sustaining historically high levels. This reflects the ongoing effects of a nationwide housing boom over the past decade, according to ATTOM.
The trend in seriously underwater mortgages showed a similar pattern. In the third quarter of 2024, 2.5 percent of mortgaged homes were considered seriously underwater, with loan balances at least 25 percent higher than the properties’ market values. This was slightly worse than the 2.4 percent recorded in the previous quarter but unchanged from the third quarter of 2023.
“Homeowner equity typically mirrors home-price trends, and the third quarter of this year followed that pattern. Equity remained elevated as the value of residential properties has surged consistently over the years. However, it held steady this quarter, reflecting the cooling of earlier sharp price increases,” Rob Barber, CEO of ATTOM, said in a release. “Despite the flat pattern, home equity keeps providing a significant boost to the economy in the form of financial leverage that tens of millions of households can use to finance major purchases or investments.”
Barber noted that fluctuations in equity could continue in the upcoming months as the housing market enters its slower season.
The share of equity-rich mortgaged properties remained substantially above early 2020 levels (26.5 percent). Although 28 of 50 states experienced declines in equity-rich properties from the second to third quarter, typically by less than two percentage points, annual increases were observed in 37 states.
Annual growth was more pronounced in lower- and mid-priced markets in the Midwest and Northeast. The largest annual increases occurred in Vermont (up from 79.8 percent to 86.4 percent), West Virginia (up from 30.5 percent to 37 percent), Connecticut (up from 41.5 percent to 47.7 percent), New Jersey (up from 45.9 percent to 52 percent), and Rhode Island (up from 54.7 percent to 60.6 percent).
Conversely, western states saw declines in equity-rich levels, led by Utah (down from 56.8 percent to 52.4 percent), Arizona (down from 54.3 percent to 50 percent), Colorado (down from 51.1 percent to 48 percent), Washington (down from 56.7 percent to 54.6 percent), and Oregon (down from 52.7 percent to 50.8 percent).
The proportion of seriously underwater mortgaged properties showed little change, maintaining the low rate of approximately one in 40 homes — marginally worse than one in 42 in the second quarter but unchanged from the third quarter of 2023. This ratio was significantly better than the one-in-15 rate reported in 2020.
Thirty states reported slight quarterly increases in seriously underwater mortgages, although 24 states showed annual improvements. Notable annual reductions were seen in Wyoming (down from 5.9 percent to 2.4 percent), West Virginia (down from 4.6 percent to 3.8 percent), Louisiana (down from 10.8 percent to 10.1 percent), Illinois (down from 4.4 percent to 4.1 percent), and New Jersey (down from 1.9 percent to 1.6 percent).
Northeastern and Western states maintained the highest shares of equity-rich homes. Vermont led with 86.4 percent of mortgaged homes considered equity-rich, followed by Maine (62.2 percent), New Hampshire (61.1 percent), Rhode Island (60.6 percent), and Montana (60.5 percent).
In contrast, most states with the lowest percentages of equity-rich properties were in the Midwest or South, with Louisiana (21.1 percent), Alaska (31.9 percent), North Dakota (33.2 percent), Maryland (33.2 percent), and Illinois (34 percent) at the bottom.
Among 107 metropolitan areas with at least 500,000 residents, markets with median home values above $450,000 had the highest equity-rich shares. San Jose, Calif., led at 68.7 percent, followed by Portland, Maine (64.6 percent), San Diego (64.1 percent), Los Angeles (63.9 percent), and Buffalo, N.Y. (63.7 percent).
Knoxville, Tenn., led the South at 60.7 percent, while Grand Rapids, Mich., topped the Midwest at 55 percent.
The Midwest and South housed 19 of the 20 states with the highest shares of seriously underwater homes. Leading states included Louisiana (10.1 percent), Mississippi (7.2 percent), Kentucky (5.5 percent), Arkansas (5.4 percent), and Iowa (5.2 percent). The lowest shares were seen in Vermont (0.7 percent), Rhode Island (0.9 percent), New Hampshire (1 percent), Massachusetts (1.1 percent), and California (1.4 percent).
Among major metro areas, Baton Rouge, La., had the highest rate at 11.1 percent, followed by New Orleans (7.4 percent), Jackson, Miss. (6.6 percent), Kansas City, Mo. (5.5 percent), and Little Rock, Ark. (5.2 percent).