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Where Underwater Homes are Concentrated

affordabilityAccording to a new report, 14.5 million residential properties in the United States were considered equity-rich as of Q4 2019. The ATTOM Data Solutions Home Equity & Underwater Report reveals that around 26.7% of U.S. mortgaged homes hold loans that are 50% or less of their estimated market value, but a high volume of seriously underwater homes were concentrated in the South and Midwest.

Louisiana topped ATTOM's list of seriously underwater homes with 16.8% seriously underwater, followed by Mississippi (16.0%, West Virginia (13.9%), Iowa (13.5%) and Arkansas (12.9%). Similarly, states with the lowest percentage of equity-rich properties were Louisiana (13.6% equity-rich), Oklahoma (14.9%), Illinois (15.3%), Arkansas (16.3%) and Alabama (16.5%).

On a zip code level, out of the 8,262 U.S. zip codes with at least 2,000 properties with mortgages in the fourth quarter, 149 zip codes were at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in the Cleveland, Ohio; Philadelphia, Pennsylvania; Milwaukee, Wisconsin; Rockford, Illinois, and St. Louis, Missouri, metropolitan statistical areas.

“Homeownership continued boosting household balance sheets across the United States in the fourth quarter of 2019, as people paying off mortgages were much more likely to be in equity-rich territory than seriously underwater. That marked yet another sign of how much the country has benefited from an eight-year housing-market boom,” said Todd Teta, Chief Product Officer with ATTOM Data Solutions. “Some big gaps in equity levels persist between regions and market segments. But as home values keep climbing, financial resources keep building for homeowners, which provides them with leverage to make home repairs, help their children through college or take on other major expenses.”

The most equity-rich states were California (42.8% equity-rich), Vermont (39.2%), Hawaii (38.8%), Washington (35.4%) and New York (35.1%).

According to First American Deputy Chief Economist Odeta Kushi, the high amounts of tappable equity nationwide could be key to preventing recession, providing a cushion to “withstand potential price declines.”

“Today, it’s reasonable to expect homeowners to stay where they are if the economy wavered and wait until they feel more financially confident to move, or tap into home equity for recurring expenses, or sell and pay off their mortgages if necessary,” Kushi said.

Though equity levels are high, ATTOM also notes that over half of all properties were equity-rich in 451 zip codes. Among 8,262 U.S. zip codes with at least 2,000 properties with mortgages in the fourth quarter of 2019, there were 451 zip codes where at least half of all properties with a mortgage were equity rich. The top 25 were all in California, with most in the San Francisco Bay area. They were led by zip codes 94116 in San Francisco (82.6% equity-rich), 94040 in Mountain View (81.7%), 94122 in San Francisco (80.6%), 94112 in San Francisco (80.1%) and 94087 in Sunnyvale (79.5%).

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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