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3.6M Homes Seriously Underwater

ATTOM Data Solutions has released its first-quarter 2020 U.S. Home Equity & Underwater Report, which shows that 14.5 million residential properties in the United States were considered equity-rich, meaning the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value.

The count of equity-rich properties in the first quarter of 2020 represented 26.5%, or about one in four, of the 54.7 million mortgaged homes in the U.S. That percentage was down slightly from the 26.7 percent level in the fourth quarter of 2019.

The report also shows that just 3.6 million, or one in 15, mortgaged homes in the first quarter of 2020 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25% more than the property’s estimated market value. That figure represented 6.6% of all U.S. properties with a mortgage, up slightly from 6.4% in the prior quarter.

The figures were derived from the last data recorded before the economic fallout from the Coronavirus pandemic began to sweep across the U.S., potentially damaging the nation’s housing market.

“Homeowners’ balance sheets generally remained strong in the first quarter of 2020 across the U.S., with about the same levels of equity-rich or seriously underwater mortgages as in the prior quarter. In the latest marker of the ongoing housing market boom, mortgage payers were four times as likely to have homes worth considerably more than what they owed on their loans than considerably less,” said Todd Teta, Chief Product Officer with ATTOM Data Solutions. “But as with other rosy first-quarter reports, this one needs to be taken in the context of the looming impact of the Coronavirus pandemic. With the potential for home values to fall, there is a significant chance that equity levels could drop over the coming months while underwater levels rise.”

The top 10 states with the highest share of equity-rich properties in the first quarter of 2020 were all in the Northeast and West regions, led by California (42.3% equity-rich), Hawaii (39.0%), Vermont (38.2%), Washington (36.6%) and Oregon (34.0%).

States with the lowest percentage of equity-rich properties were Louisiana (13.5% equity-rich), Oklahoma (14.7%), Illinois (15.2%), Arkansas (16.3%) and Alabama (16.3%). Those were the same states with the five lowest levels in the fourth quarter of 2019.

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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