Earlier this year, ATTOM released its fourth-quarter 2021 U.S. Home Equity & Underwater Report. The release revealed that 41.9 percent of mortgaged residential properties were considered equity-rich in the fourth quarter. The combined estimated amount of loan balances secured by the surveyed properties was no more than 50 percent of their estimated market values.

Out of the homes surveyed in the fourth quarter of 2021, nearly one out of every two homes were equity-rich, increasing from 39.5 percent in the third quarter of 2021 and 30.2 percent in 2020’s fourth quarter. The report also showed that only one in 31 homes were underwater in the fourth quarter, which was down from 3.4 percent of all U.S. homes in the third quarter and 5.4 percent in the previous year.

Throughout the United States, 48 out of 50 states saw increases in equity-rich levels, and in 46 states, underwater percentages decreased. Year-over-year, the country saw levels rise in 49 states, including the District of Columbia, with underwater percentages significantly dropping in 48 states.

Although boasting numbers that make 2021 one of the best years the housing market has seen in the past decade, the country has gradually recovered from the economic devastation of the 2020 Coronavirus pandemic. The market surged amid a flood of new home purchases spurred heavily by rock-bottom mortgage rates and a desire to trade life in congested virus-prone locales for the increased relief afforded by a house and yard.

While buyers continued to search through housing inventories that decreased dramatically, the median national single-family home value surpassed $300,000, creating a unique seller’s market. In the second half of 2021, a weakening foundation displayed signs of declining home affordability, falling investor profits and rising foreclosures.

“Another quarter, another boost to the balance sheets of homeowners in most of the United States – that was the story from the fourth quarter of last year. As home prices kept rising, so did the equity built up in residential properties, to the point where close to half of all mortgage payers around the country found themselves in equity-rich territory,” said Todd Teta, chief product officer with ATTOM.

 

No doubt, there are market metrics that pose warnings about how long the boom can last and equity can keep improving. We keep watching those closely. But for now, homeowners are sitting pretty as the wealth they have tucked away in their homes keeps growing.”

Western and Southern States See Biggest Improvement

In the West and South, 13 out of 15 states saw significant increases in equity-rich levels from the third to the fourth quarter of last year. The state that saw the top improvement was Tennessee, increasing from 41.4 to 47.2 percent. Other southern states that saw impressive boosts were North Caroline (+5.6 percent), Nevada (+4.9 percent), Georgia (+4.8 percent) and Arizona (+4.4 percent).

The states that saw the largest drop or least impressive increase in equity-rich levels were Wyoming (-1.3 percent), Connecticut (-0.9 percent), Kentucky (+0.4 percent), Alaska (+0.9 percent) and Illinois (+1 percent).

Largest Southern and Midwestern Underwater Decreases

Out of the states surveyed, 14 out of 15 states that saw large decreases in underwater percentages in 2021 from the third to the fourth quarter were in the South and Midwest markets. Mississippi led the charge with a 5.5 percent decrease, followed by Maine (-1.4 percent), Iowa (-1.4 percent), West Virginia (-1.2 percent) and Arkansas (-1.1 percent).

The states that rose or declined the least were Wyoming (+2.8 percent), Connecticut (+0.5 percent), Arizona (+0.1 percent), Utah (+0.01 percent) and South Dakota (-0.01 percent).

Largest Share of Equity-Rich Homes Located in West

The fourth quarter of 2021 revealed the West had the largest number of equity-rich homes while the South and Midwest showcase the smallest. Nine of the top 10 states with the highest levels in the fourth quarter were in that region, led by Idaho, with 66.7 percent of homes showcasing equity-rich levels. Vermont (+64.8 percent), Utah (+62.5 percent), Washington (+58.6 percent) and Arizona (+57.6 percent) followed.

The South and Midwest represented 12 out of 15 states surveyed that displayed the lowest percentages of equity-rich properties. Illinois topped the list with only 22.5 percent of mortgaged homes, followed by Louisiana (22.5 percent), Alaska (23.9 percent), Wyoming (24.5 percent) and Mississippi (26.3 percent).

The 10 metro areas with the lowest percentages of equity-rich properties in the fourth quarter of 2021 were in the Midwest and South, led by Jackson, Mississippi (17.1 percent), Baton Rouge (17.5 percent), Wichita, Kansas (18.5 percent), Little Rock (21.7 percent) and Virginia Beach (23.1 percent).

The portion of mortgaged homes considered equity rich rose from the third quarter of 2021 to the fourth quarter of 2021 in 101 out of the 106 metro areas analyzed, while all but two improved year-over-year.

In the 2,500 zip codes surveyed, at least half of all properties were considered equity-rich, with 45 of the top 50 in California, Massachusetts, Texas and Idaho and 13 of the top 25 in Austin, Texas.

Out of the 8,651 zip codes represented in the report, more than 25 percent of residential properties seriously underwater were in 18 zip codes, four of the 18 located in Cleveland, Ohio.

A curator of the nation’s premier property database, ATTOM powers products to improve innovation, transparency, efficiency and disruption in a data-driven economy. The company multi-sources deed, mortgage, property tax, foreclosure, natural hazard, neighborhood and environmental risk data for more than 155 million U.S. residential and commercial properties, covering 99 percent of the nation’s population.

For Reference:

Seriously underwater: Loan to value ratio of 125 percent or above, meaning the property owner owed at least 25 percent more than the estimated market value of the property.

Equity-rich: Loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity.

To read the 2021 Home Equity & Underwater Report, visit www.AttomData.com.

For more information about the current state of the housing market, new Atlanta construction and upcoming events, follow along at www.AtlantaRealEstateForum.com.