Biggest Year-over-Year Drop in Number of Seriously Underwater Since Q2 2015; Share of Equity Rich Properties Increases to New High of 26 Percent
Irvine, CA – Nov. 16, 2017 ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, today released its Q3 2017 U.S. Home Equity & Underwater Report, which shows that at the end of the third quarter of 2017 there were 4.6 million (4,628,408) U.S. properties that were seriously underwater (where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 800,000 properties from the previous quarter and down by more than 1.4 million properties from Q3 2016 — the biggest year-over-year drop since Q2 2015.
The 4.6 million seriously underwater properties at the end of Q3 2017 represented 8.7 percent of all U.S. properties with a mortgage, down from 9.5 percent in the previous quarter and down from 10.8 percent in Q3 2016.
“Accelerating home price appreciation this year is increasing the velocity at which seriously underwater homeowners are recovering home equity lost during the Great Recession,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013. Continued home price appreciation is also helping to grow the number of equity rich homeowners across the country compared to a year ago.”
26 percent of U.S. properties were equity rich in Q3 2017
There were more than 14 million (14,030,394) U.S. properties that were equity rich — where the combined loan amount secured by the property was 50 percent or less of the estimated market value of the property — down slightly from the previous quarter but still up by 905,000 compared to a year ago.
The 14 million equity rich U.S. properties represented 26.4 percent of all U.S. properties with a mortgage, up from 24.6 percent in the previous quarter and up from 23.4 percent in Q3 2016.
Highest share of equity rich properties in Hawaii, California, New York, Oregon, Washington
States with the highest share of equity rich properties were Hawaii (41.9 percent); California (41.4 percent); New York (35.7 percent); Oregon (34.0 percent) and Washington (33.6 percent).
Among 93 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of equity rich properties were San Jose, California (61.0 percent); San Francisco, California (56.4 percent); Los Angeles, California (45.3 percent); Honolulu, Hawaii (43.9 percent); and Oxnard-Thousand Oaks-Ventura, California (38.7 percent).
“The number of Seattle homeowners who are considered ‘seriously underwater’ continues to drop and is now at an all-time low of 3 percent,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Thanks to the strong appreciation of home prices in our area, I expect to see this number drop even further as we move into 2018. At the same time, the percentage of ‘equity rich’ homeowners in Seattle continues to rise, reporting a remarkable 103 percent increase since the end of 2013.”
Other metros where at least 35 percent of properties were equity rich at the end of Q3 2017 were Seattle, Washington (38.7 percent); San Diego, California (38.3 percent); Portland, Oregon (36.7 percent); Austin, Texas (35.8 percent); and Stockton, California (35.2 percent).
Highest share of seriously underwater properties in Baton Rouge, Scranton, Youngstown
States with the highest share of seriously underwater properties were Louisiana (19.2 percent); Iowa (14.2 percent); Pennsylvania (14.0 percent); Mississippi (13.8 percent); and Alabama (13.7 percent).
- New Jersey had the highest foreclosure rate during the first half of the year, with 0.99 percent of properties with a foreclosure.
- The highest metro foreclosure rates belong to Atlantic City, New Jersey at 1.71 percent of properties, followed by Trenton, Philadelphia, Chicago and Pennsylvania.
Among 93 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of seriously underwater properties were Baton Rouge, Louisiana (20.5 percent); Scranton, Pennsylvania (19.5 percent); Youngstown, Ohio (18.2 percent); New Orleans, Louisiana (17.4 percent); and Dayton, Ohio (16.4 percent).
2018: A Big Year for the Real Estate Market
The Great Recession finally came to an end in 2009, after millions upon millions of Americans were forced into foreclosure.
According to Fannie Mae, the waiting period following a foreclosure is seven years, with the agency noting the following: “A seven-year waiting period is required, and is measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower.”
With this seven-year period coming to an end for those who faced foreclosure toward the end of the Great Recession, there’s reason to believe that the real estate market could pick back up.
Campbell said, “There’s no way of knowing if these buyers will dip their toes into the homeowner pool once again, but the possibility is definitely there. This alone could have a big impact on the real estate market as a whole in the year to come.”